Managerial Economics and Micro Economics
Microeconomics and managerial economics are the sub-divisions of are the sub-divisions of economics along with others such as macroeconomics, It deals with different methodologies and principles for businesses to allocate scarce. Managerial economics has a close interaction with Economics, Mathematics and Statistics Business/Managerial Economics Economics has been divided in two main branches: Micro-economics and macro-economics. (a) Microeconomics and macroeconomics? Managerial economics suggests that successful businesses should employ people who understand the of.
Micro-economics has been defined as that branch where the unit of study is an individual or a firm. Macro-economics, on the other hand, is aggregative in character and has the entire economy as a unit of study. In this connection, Economics, Statistics, Mathematics and Accounting deserve special mention. Hague has described managerial Economics uas using the logic of Economics, Mathematics and Statistics to provide effective ways of thinking about business decision problems.
Managerial Economics and Traditional Economics: Managerial Economics has been described as economics applied to decision-making. It may be viewed as a special branch of economics bridging the gulf between pure economic theory and managerial practice. Traditional Economics has two main divisions: Microeconomics; also known as price theory, is the main source of concepts and analytical tools for managerial economics.
To illustrate, various microeconomic concepts such as elasticity of demand, marginal cost, the short and long runs, opportunity cost, various market forms, etc. The chief contribution of macroeconomics is in the area of forecasting. The modern theory of income, employment, trade cycles, etc. As the prospects of an individual firm often depend greedy on general business conditions, individual firm forecasts depend on general business forecasts.
Managerial Economics and Accounting: Managerial economics and accounting are closely interrelated. Accounting can be defined as the recording of financial operations of a business firm. A business manager needs a lot of accounting information data for logical analysis in decision-making and policy formulation at the level of firm.
The accounting data and information has to be presented in a methodological manner worthy of analysis and interpretation for decision-making and future planning. This is why a new branch of accounting known as 'management accounting' has developed to help correct managerial decision-making.
The main task of management accounting is to provide the sort of data which managers need to solve some business problems accurately. Managerial Economics and Operational Research: Macroeconomics, on the other hand, is the study of a national economy as a whole.
Microeconomics focuses on issues that affect individuals and companies. This could mean studying the supply and demand for a specific product, the production that an individual or business is capable of, or the effects of regulations on a business.
The Difference Between Micro and Macro Economics
Macroeconomics focuses on issues that affect the economy as a whole. Some of the most common focuses of macroeconomics include unemployment rates, the gross domestic product of an economy, and the effects of exports and imports. Does this make sense? While both fields of economics often use the same principles and formulas to solve problems, microeconomics is the study of economics at a far smaller scale, while macroeconomics is the study of large-scale economic issues.
Both fields of economics are interdependent At first glance, micro and macro economics might seem completely different from one another. In reality, these two economic fields are remarkably similar, and the issues they study often overlap significantly. For example, a common focus of macroeconomics is inflation and the cost of living for a specific economy.
Managerial Economics Overview
Inflation is caused by a variety of factors, ranging from low interest rates to expansion of the money supply. Since inflation raises the price of goods, services and commodities, it has serious effects for individuals and businesses. On a microeconomic level, this has several effects.
Businesses are forced to raise their prices in response to the increased cost of materials. They also need to pay their employees more over the long term to account for the higher cost of living.
Micro Economic Analysis is important as it is applied to day to day dilemma and concerns. The reliance of Managerial Economics on Micro Economics is made clearer in the points below: If a manager wants to increase the price of the product due to increase in cost of production, he will analyze the price elasticity of demand for that product so that price rise is not followed by substantial fall in the demand of the product.Microeconomics vs Macroeconomics - Meaning and Difference - in Hindi
It is the application of demand analysis to the real world situation. For fixing the price of the products managers applies the pricing theories, cost and revenue theories of micro economics.
Decisions regarding production and supply of the product in the market, knowledge of availability of fixed and variable factors of production, state of technology to be used and availability of raw-material are essential. This can be determined with the knowledge of theory of production. Determination of price and output is possible with the acquaintance of market structures and approaches pertinent for determination of price and output in the given market setup.
Managerial economics utilizes statistical methods such as game theory, linear programming etc for application of Economic Theory in Decision making.