02: Nature of Managerial Economics

Managerial Economics as a Science

is a scientific discipline focused on decision-making under resource constraints. Like science, it relies on systematic observation, analysis, and experimentation to guide choices among alternatives.

While the economic environment involves unpredictable human behavior, managerial decisions are shaped by tested policies, experience, and ongoing evaluation. These policies, though not rigid, are based on principle that are broadly applicable and adaptable to changing conditions.

Managerial Economics as an Art

Managerial Economics is also an _____. requiring skillful application of knowledge and experience. A managerial economist must creatively apply economic theories to real-world situations, using judgment and insight to achieve organizational goals.

Micro and Macro Components (2):

1. Microeconomic Aspects

2. Macroeconomic Aspects

Microeconomic Aspects

Man Econ uses _____________ principles to internal organizational decisions. It focuses on:

1. Organizational goals and profitability

2. Product demand and pricing

3. Output levels and cost structures

4. Availability of substitutes and complementary goods

5. Target consumers and market segmentation

Macroeconomic Aspects

Organizations operate within a broader economic environment. Man Econ also considers ____________ factors such as:

1. Government policies and regulations

2. Inflation, income, and employment levels

3. Business cycle stages

4. Exchange rates and balance of payments

5. Consumer spending, saving, and investment trends

6. Overall market conditions