What is meant by managerial economics?

- Managerial economics is a science that helps to explain how

resources such as labor, technology, land, and money, can be
allocated efficiently. As such, managerial economics focuses on
decisions individuals make.
is a branch of economics involving the application of economic
methods in the managerial decision-making process. [1] Economics is
the study of the production, distribution and consumption of goods and
services. Managerial economics involves the use of economic theories
and principles to make decisions regarding the allocation of scarce
resources.

Managers use economic frameworks in order to optimise profits,

resource allocation and the overall output of the firm, whilst improving
efficiency and minimising unproductive activities. [3] These frameworks
assist organisations to make rational, progressive decisions, by
analysing practical problems at both micro and macroeconomic levels.
[4]
 Managerial decisions involve forecasting (making decisions about
the future), which involve levels of risk and uncertainty, however, the
assistance of managerial economic techniques aid in informing
managers in these decisions.[5]
The two main purposes of managerial economics are:

1. To optimize decision making when the firm is faced with

problems or obstacles, with the consideration and
application of macro and microeconomic theories and
principles.[6]
2. To analyze the possible effects and implications of both
short and long-term planning decisions on the revenue and
profitability of the Business.
The core principles that managerial economist use to achieve the
above purposes are:

 monitoring operations management and performance,

 target or goal setting, and
  talent management and development.

The theory of Managerial Economics includes a focus on; incentives,

business
organization, biases, advertising, innovation, uncertainty, pricing, anal
ytics, and competition.[9] In other words, managerial economics is a
combination of economics and managerial theory. It helps the
manager in decision-making and acts as a link between practice and
theory.[10] Furthermore, managerial economics provides the device and
techniques for managers to make the best possible decisions for any
scenario.
Some examples of the types of problems that the tools provided by
managerial economics can answer are:

 The price and quantity of a good or service that a business

should produce.
 Whether to invest in training current staff or to look into the
market.
 When to purchase or retire fleet equipment.
 Decisions regarding understanding the competition between
two firms based on the motive of profit maximization.[11]
 The impacts of consumer and competitor incentives plan on
business decisions[12]
Managerial economics is sometimes referred to as business
economics and is a branch of economics that
applies microeconomic analysis to decision methods of businesses or
other management units to assist managers to make a wide array of
multifaceted decisions. The calculation and quantitative analysis
draws heavily from techniques such as regression
analysis, correlation and calculus.