The role of managerial Economics in decision making is to help in the analysis of economic trends which will be used in making critical decision. LO6 Apply marginal analysis to determine the optimal level of a managerial control variable. Decision-making is thus the core of managerial activities in an organisation. Managerial economics studies the application of the principles, techniques and concepts of economics to managerial problems of business and industrial enterprises. Definition of Decision-Making: Some of the important definitions of decision-making are given as under. Business Economics is concern with economic issues & problems related to business organization, business management, and business strategy. It makes use of economic theory and concepts. LO3 Explain the role of profits in a market economy. Business involves decision making. LO4 Apply the five forces framework to analyze the sustainability of an industry’s profits. This is very important because economic profits play a crucial role in a market based economy., While above normal profits are indicators of expansion and growth, below normal profits cautions you about tightening or retrenchment. The. Managerial Economics assists the managers of a firm in a rational solution of obstacles faced in the firm’s activities. Most readers will readily acknowledge that the subject matter of economics applies to their organizations and to their roles as managers. All managerial functions viz., planning, organizing, staffing, directing, coordinating and controlling are carried through decisions. According to Mc Nair and Meriam, ˝Business economic consists of the use of economic modes of thought to analyse business situations. Basic tools of managerial economics for decision making 1. LO7 Identify and apply six principles of effective managerial decision making. It helps in formulating logical managerial decisions. “Managerial economics is the application of economic theory and methodology to decision-making problems faced by both public and private institutions”. Managerial Economics can be defined as amalgamation of economic theory with business practices so as to ease decision-making and future planning by management. LO5 Apply present value analysis to make decisions and value assets. Decision making means the process of selecting one out of two or more alternative courses of action. “What is happening” rather than “What will happen” is the key of Business Economics. Prepared By MILAN PADARIYA [MBA in Operation and Marketing Management] Co-Founder @ Stark Soft Pvt Ltd 2. Business decision making is essentially a process of selecting the best out of alternative opportunities open to the firm. and making decisions for these organizations is the role of executives and managers. Managerial economics is a #management science that gives you more idea about the economic aspects of a market and how they affect your decision making. it may be that business economics serves as a bridge between economic theory and decision-making in the context of business.
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