Managerial Economics

Pascua, Jhon Mark T.

Bsais – 2c

1. Analyze the relationship of Management to economics.

Discuss.
Economics, the mother science on which management is based,
is defined as “the science which studies human behavior as a
relationship between ends and scarce means which have alternative
uses,” whereas management is about using resources to achieve
goals. Economics is a descriptive science – it tells us what is
happening, whereas management is a prescriptive discipline that
requires us to act. Management economics is frequently a division
of economic science and, in a broader sense, a unique branch of
the social, cultural, and humanities sciences. Similar to
economic science, it is founded on the premise that most goods
are finite and need to be managed by the participants. It
describes how the company operates economically within the
framework of the national economy. In addition, the best possible
organization of the production’s inputs should come before
company objectives and financial needs. Additionally, all
households are businesses in a broader sense.

2. Why is there a need to relate profitability to economics?

Explain.
Economic profits are the hypothetical profits that emerge
when a company’s management deducts all costs from revenue made
during a specific time period as well as the costs associated
with missed opportunities. It can be crucial for the management
of a company to understand potential weaknesses in its decisions
regarding business strategies or ventures, lost financial
opportunities, and how effectively it uses company resources.