ECONOMIC FOR

MANAGERS

TOPIC: Illustrate the scope of managerial economics in

the real-world scenario. Explain how managerial
economics solve the fundamental economics questions
and problems faced by the business during the current
pandemic scenario

SUBMITTED TO, SUBMITTED BY,

DR. Bijith George Abraham Ashlin Saji
SUBMITTED ON, Batch A
11/11/2021 MBA (2021-2023)
 INTRODUCTION

On a daily basis, businesses must make critical decisions. These

decisions can be about an investment opportunity, a new product, a new
competitor, or a company's direction. Businesses must rely on experts
when making such critical decisions. These experts have a background
in Managerial Economics. Managerial Economists get to sit at the table
with the executives rather than being part of the company's executive
branch. They are the experts who assign monetary values to various
opportunities and then urge the company to proceed.
Monetary economics has attempted to answer simple questions
throughout history. What is the worth of money in a society? Money
had no inherent value in ancient times, which is why it is so simple
today. This began to change when ships began to sail around the world
and trade began. To facilitate trade, merchants devised a system of
credit and exchange. Since the beginning of time, monetary economics
has attempted to comprehend the purchasing power of money and its
relationship to interest rates and economic activities.
WHAT DOES MANAGERIAL ECONOMICS MEANS?
Managerial economics is a branch of management studies that focuses
on solving business problems and making decisions using
microeconomic and macroeconomic theories and principles. It is a
specialized field that uses various economic theories to address internal
issues within an organization. Economics is an essential component of
any business. This single concept underpins all business assumptions,
forecasting, and investments. In a nutshell, this is what managerial
economics means.

SCOPE OF MANAGERIAL ECONOMIC IN REAL

WORLD SCENARIO
Managerial economics is commonly used in organisations to address a
variety of business issues. Both microeconomics and macroeconomics
have an equal impact on the organisation and its operations. The
following examples demonstrate its significance:
Micro-economy Concerned with operational issues
The following are the various microeconomic theories or principles
used to solve internal organisational problems that arise during
business operations:
• Demand Theory: Demand Theory focuses on the consumer's
reaction to a product or service. This considers the customers'
desires, expectations, preferences, and conditions in order to
improve the manufacturing process.

• Decisions on Production and Production Theory: This theory

is primarily concerned with the volume of production, process,
capital and labour, costs involved, and so on. Its goal is to
optimise production in order to meet customer demand.
 • Market Structure Pricing Theory and Analysis: This theory
and analysis focuses on determining a product's price while
taking into account competition, market dynamics, production
costs, optimising sales volume, and so on.

• Exam and management of profit: because businesses are run

for profit, they always strive to maximise profit. It is also affected
by market demand, input costs, level of competition, and so on.

• Decision on Capital and investment theory: Capital is the most

important business component. This philosophy prioritises the
proper distribution of the company's resources and investments in
productive programmes or initiatives to improve operational
performance.

MACRO-ECONOMICS APPLIED TO BUSINESS

ENVIRONMENT
The environment in which an organisation operates has a significant
impact on it.
• Economic environment: A country's economic conditions, GDP,
government policies, and so on have an indirect impact on the company
and its operations.
• Social environment: The society in which the organisation operates,
such as employment conditions, trade unions, consumer cooperatives,
and so on, has an impact on it.
• Political environment: a country's political system, whether
authoritarian or democratic; political stability; and attitude toward the
private sector all have an impact on the organization's growth and
development.
Management economics is a useful method for assessing the company's
priorities and objectives, the organization's current role, and what
management can do to bridge the gap between the two.
•Business Economist: They work with a variety of industries and
businesses, and their primary role is to act as a bridge between the
corporate world and the outside world.
•Asset Manager: They work with a variety of industries and
businesses, and their primary role is to act as a liaison between the
corporate world and the outside world.
•Credit and risk manager: To assist both the lender and the buyer, we
analyse the company's financial details and calculate the associated
default risk.
•Market Analyst: A Market Analyst analyses the market so that their
employers can make better decisions about product launches or service
delivery.
•Operations Manager: An Operations Manager manages all day-to-
day activities in the company, from output to statistics review to
educating new employees, and must ensure that the organisation runs
at peak efficiency.
•Indian Economic Services: You must have an M.Sc. and an MA in
economics with at least a 55 percent grade point average before taking
the Indian Economic Service Exam. The age range is between 21 and
30 years old. UPSC is in charge of administering the exam.
•Banking Services in the Public Sector: The Reserve Bank of India
also recruits banking-sector economists through their own various
recruitment exams. The age range is 21-28 years old.
•Private and foreign banks: An Economics degree holder can apply
to both private and foreign banks. Banking job titles include branch
managers, clerks, economic analysts, planning and development
officers, and so on.
• Worldwide Agencies: Experienced and well-known economists in a
well-known international organisation such as the World Bank.
HOW MANAGERIAL ECONOMICS HELPS BUSINESS
DURING THIS CURRENT PANDEMIC SCENARIO:

Many workers and potential shoppers withdrew in the early days of the
COVID-19 pandemic, which had a significant impact on the global
economy as well as the US economy. Retail sales in the United States,
for example, fell in April 2020 before recovering in July.
Of course, the unexpected drop in demand wreaked havoc on the labour
market. The national unemployment rate peaked at 14.8% in April 2020
before falling to 6.2 percent in February 2021. It had fallen to 5.4
percent by July 2021. According to additional estimates, the pandemic
affected more than 25.7 million workers. This figure included those
whose hours or pay had been reduced, as well as those who were
completely unemployed.
The economic shockwaves were felt from Beijing to Madrid, causing a
drag on the global economy not seen in decades. The International
Monetary Fund (IMF) predicted in January 2021 that the global
economy would contract by 3.5 percent in 2020, the worst drop in
recent memory. The IMF, on the other hand, predicted a strong
recovery in 2021 and 2022, with global growth of 5.5 percent and 4.2
percent, respectively.

THE ROLE OF GOVERNMENT INTERVENTION

In an ideal world, legislatures and central banks would use their veto
power to help mitigate an economic crisis. The United States enacted
several rounds of stimulus legislation. To mitigate the economic impact
of the global coronavirus pandemic, U.S. lawmakers passed the
Coronavirus Aid, Relief, and Economic Security (CARES) Act in
March 2020.
 CONCLUSION

Finally, managerial economics plays an important role in business

organisations. It is very useful to management in decision making and
forward planning in relation to the internal operations of a business
because it provides a clear understanding of market conditions as well
as analytical tools through which the competitions prevailing in the
markets can be studied while also predicting market behaviour. It
allows for the analysis of information about the business environment
in which a company is managed.
Managerial economics, in this way, contributes to the profitable growth
of a business and the effective resolution of business problems by
transforming the economic scenario into viable business opportunities
for business organisations. It thus enables managers to optimise
business decisions by involving them in forward planning activities that
are both effective and efficient.