1.

9 Self-Assessment Test
1. What does economic theory contribute to Managerial Economics?
2. What is the contribution of psychology and organization behavior to Managerial
Economics?
3. How is mathematics & statistics and operational research useful to Managerial Economics?
4. List the important characteristics of Managerial Economics.
5. Summarize the scope of Managerial Economics as a learner.
6. Why should you study the Managerial Economics?

1.1 Introduction
 The Second World War created a tremendous pressure on scarce economic resources of the
world
 the need for optimum utilization of resources intensified further, which ultimately gave birth
to a new discipline popularly known as Managerial Economics.

1.2 Meaning and Definition of Managerial Economics

 It is also known as ‘Economics for Managers’. Basically, Managerial Economics is an Applied
Economics in the sphere of business management.
 application of economic theory and methodology to decision-making problems faced by the
business firms.
 process of application of principles, concepts and techniques and tools of economics to solve
the managerial problems of business organizations

Managerial Economics

 bridging the gap between the economic theory and managerial practice, use of the
tools of economic analysis in clarifying problems in organizing and in comparing
alternative courses of action-W. W. Haynes

 is the integration of economic theory with business practice for the purpose of
facilitating decision-making and forward planning by management. -Spencer &
Siegelman

 “The purpose of Managerial Economics is to show how economic analysis can be used in
formulating business policies.” -Joel Dean

 managerial economics is the study of economic theories, logic, concepts and tools of
economic analysis that are used in the process of business decision-making by the business
managers in taking rational, correct and timely decisions.