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(Part 1) Self Made Module
(Part 1) Self Made Module
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
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.