I.

Managerial Economics
 Science of directing scarce resources in the management of business or organizations
 Science of cost-effective management of scarce resources
 The study of economics is supposed to help man make good decisions and better judgments
 came from the Greek word ‘oikos’ (house) and ‘nomos’ (managing) which means household
management
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II. Importance
 It practices managers in emphasizing simple or practical ideas, focusing on application to
business decision making, integrates global business issues and practice, and it also provides
conceptual rigor without mathematical complexity.
 It applies globally and
 Economics must be a very important course to learn because the task of economics is to address
the problem of scarcity.
 a great need to study how man behaves, particularly on how he decides given several choices
 The study of economics is supposed to help man make good decisions and better judgments


III. Highlights
IV. term autarky characterizing the nomads of early times would most closely refer to the
concept of self-sufficiency

Value Added
 Equation: Buyer benefit less seller cost. Compromises buyer surplus and economic profit.
 Essential concept for managerial decision-making is economic profit
 Aim of competitive strategy is to deliver sustained profit above the competitive level
 Anyone who delivers benefit less than the cost of production is destroying value
 Buyer surplus is the difference between the buyer’s benefit and expenditure (buyer’s va)
 Economic profit if the difference between the revenue and cost of production (seller’s va)

Decision-making
 Which (participation) and how much (extent) is the two fundamental decisions in business.
