I.

Introduction to Managerial Economics

Subject matter:
Limited resources
Unlimited needs and wants
Managerial: directing an enterprise that is organize to make profit towards the
direction where it wants to go
Objective: what you want them to reach or know
Economics: a social science that deals with scarce resources in order to fulfill
the unlimited needs and wants
: Greek word ‘oikos’ and ‘nomia’
: oikos- household (because of isolated community / autonomous and independent)
: nomia- management
: using economic tools to make management efficient
: realities of life
: scarcity
: needs (cannot do without)
: wants (you can do without)
Economizing: maximize
Social science: deals with human behavior
3 levels of economic analysis:
Microeconomics
Macroeconomics
International Economics
Microeconomics: individual economic entities
: individual, family business, household
: improve the living condition
: communicating economic entities through the government
: interaction of human and the government
International Economics: dynamics and interaction to the different countries
: issues in the age of globalization and financial integration
Rules of Economics: give you guidelines on how you manage and maximize your
resources
Fiscal policy: government spending and taxing policies
Ceteris Paribus: analyzing the relationship between two variables, all other
variables are assumed uncharged
Law of Demand and Supply: the inverse relationship between price and quantity of a
commodity in the market
Economic theories: derived from normal people’s behavior
MANAGERIAL ECONOMICS: marriage between management concepts and economic concepts
where we use economic tools, concepts, theories and methodologies to the
application of management and business to make it efficient
: the application of economic theory and quantitative methods to the
managerial decision-making process