Managerial Economics Flashcards, test questions and answers
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What is Managerial Economics?
Managerial economics is a branch of economics that focuses on applying economic theory and analysis to the decision-making process within an organization. It helps managers make decisions regarding their operations, strategic planning, and resource allocation by combining both traditional economic models with managerial techniques. Managerial economists analyze data such as cost structures, pricing information, demand estimates, capital investment requirements, and market trends in order to assist managers in making informed decisions about their businesses.In order to effectively understand managerial economics it is important to first understand basic economic principles. Managerial economics draws from many different fields including microeconomics (the study of individual markets), macroeconomics (the study of the entire economy), game theory (a mathematical model used for analyzing competitive situations) and econometrics (the use of statistics to explain economic relationships). By utilizing these various tools it allows for complex business scenarios to be analyzed. When using managerial economics there are two main areas that need to be focused on: short-term objectives and long-term objectives. Short-term objectives are those which focus on immediate problems or opportunities that arise while long-term objectives consider overall strategy involving multiple time frames over a longer period of time. The primary objective when employing managerial economics is understanding how best practices can be implemented in order to maximize profits without sacrificing quality or efficiency. This involves careful consideration of costs versus benefits associated with any given decision or action taken by an organization’s management team.