Peñol, Shaira Nicole BSMA 1-A

AE 11: Managerial Economics

Module 1- Assignment 1

Discuss any three (3) aspects of Microeconomic Theory that are relevant to Managerial Economics:

 Price Theory
 Market Structure and Competition Theory
 Theory of the Firm

Price Theory
- The theory of price is an economic theory that states that the price for any specific good or
service is based on the relationship between its supply and demand. It is an economic theory that
states that the price for any specific good or service is based on the relationship between its
supply and demand.

When it comes to price analysis, production analysis, capital budgeting, risk analysis, and demand
forecasting, Price Theory is quite beneficial in managerial economics. It enables such organizations to
make the most use of their limited resources while also supporting them in achieving their goals as
efficiently as possible.

Market Structure and Competition Theory

- Market structure, in economics, refers to how different industries are classified and differentiated
based on their degree and nature of competition for goods and services. It is based on the
characteristics that influence the behavior and outcomes of companies working in a specific
market.
Simulating real-world market conditions is easier with several types of market structures. As a result,
knowing different market structures can help a manager better grasp real-world market scenarios and
the rules that govern decision-making. Knowledge of diverse market structures can also help with
business management in specific market situations.

Theory of the Firm

- a microeconomic concept that states that a firm exists and make decisions to maximize profits. It
focuses on the determination of goods, outputs, and income distributions in markets through
supply and demand.
When it comes to Managerial Economics, the Theory of the Firm assists a firm's management in
rationally resolving problems that develop during its operations. It is based on economic theory and
concepts. It assists in the development of sound managerial decisions. The cornerstone of managerial
economics is the microeconomic theory of the firm.
Reference/s:
https://www.investopedia.com/terms/t/theory-of-price.asp
https://corporatefinanceinstitute.com/resources/knowledge/economics/market-structure/?
fbclid=IwAR3rRWpdlOLSR1ZRSloYUB7qeO6NBXOt4NOV_qiZkeg1bhQVrZij6ptJ008
https://www.investopedia.com/terms/t/theory-firm.asp