MANAGERIAL ECONONICS

ASSIGNMENT
TRACE THE ORIGIN OF MANEGERIAL
ECONOMICS

Managerial economics is considered to be applied micro

economics as it is concerned with the application of micro
economics principles to decision making by firms.
The origin of managerial economics as a separate course of
management studies can be attributed to the basic economic
problems of the society. Which are;
1. What to produce
2. How to produce
3. And for whom to produce
The above problems lead to the development of managerial
economics. Lets take a look at them individually.
1. What to produce

Every society is faced with the first problem of determining

what to goods and services are to be produced and the
quantity that are to be produced. This problem arises as a
result of the fact that human wants are unlimited and insatiable
relative to the available resources. The question will be should
more food be produced in order to feed the teeming population
or should more arms and ammunition be produce to strengthen
the defense of the societys territory.
Therefore choice has to be made of which of these goods are to
be produced. The production of one commodity will definitely
lead to the production of the others in small quantity. This is
where managerial economics comes in. managerial economics
can help the society make the right choice.

2. How to produce
The next problem is determining how to go about in producing
those commodities chosen for production. This decision to
produce determine the resources to be used those to produce
this commodities and the production techniques or methods to
be used.
Two main methods of production can be used which are; the
labour intensive and the capital intensive. Managerial
economics can help determine the best method to be use in a
given situation or project in order to minimize cost and
maximize profit.
3. For whom to produce
The next problem is determining who will enjoy the goods and
services produced. Irrespective of the type of economics
system adopted, goods and services are produced mainly to

satisfy human wants. Managerial economics can also aid in

tackling this problem.
The above problems lead to the development of managerial
economics in order to help tackle the basic economic problem
of a society. Other factors that also lead to the emergence of
managerial economics can be attributed to;
a. Growing complexity of business decision making process due
to changing market conditions and business environment.
b. Consequent upon the increasing use of economic logic,
concepts, theories and tools of economic analysis in the
process of decision making.
c. Rapid increase in demand for professionally trained
managerial manpower.
Finally, we can say that managerial economics emerges or
originated as a result of human wants and needs. Its origin can
be traced from the basic economic problems of society.