Introduction To Managerial Economic Science - Costless Report Notes

Nature of Managerial Economics

Managerial Economics as well as Business economic science are the 2 terms, which, at times direct hold been used interchangeably. Of late, however, the term Managerial Economics has acquire to a greater extent than pop as well as seems to sack progressively the term Business Economics.

decision making as well as frontward planning. Decision Making agency the procedure of selecting i activity from 2 or to a greater extent than alternative courses of activity whereas frontward planning agency establishing plans for the future. The enquiry of alternative arises because resources such every bit capital, land, labour as well as management are limited as well as tin live employed inward alternative uses. The determination making component thus becomes i of making choices or decisions that volition provide the most efficient agency of attaining a desired end, say, turn a profit maximization. Once determination is made almost the special goal to live achieved, plans every bit to production, pricing, capital, raw materials, labour, etc., are prepared. Forward planning thus goes paw inward paw amongst determination making.

A meaning feature of the conditions, inward which line of piece of work organisation organizations piece of work as well as accept decisions, is uncertainty. And this fact of uncertainty non entirely makes the component of determination making as well as frontward planning complicated but adds a dissimilar dimension to it. If knowledge of the futurity were perfect, plans could live formulated without fault as well as hence without whatsoever demand for subsequent revision. In the existent world, however, the line of piece of work organisation managing director rarely has consummate information as well as the estimates almost futurity predicted every bit best every bit possible. As plans are implemented over time, to a greater extent than facts acquire known so that inward their light, plans may direct hold to live revised, as well as a dissimilar course of pedagogy of activity adopted. Managers are thus engaged inward a continuous procedure of determination making through an uncertain futurity as well as the overall job confronting them is i of adjusting to uncertainty.

In fulfilling the component of determination making inward an uncertainty framework, economical theory tin live pressed into service amongst considerable advantage. Economic theory deals amongst a number of concepts as well as principles relating, for example, to profit, demand, cost, pricing production, competition, line of piece of work organisation cycles, national income, etc., which aided past times allied disciplines similar Accounting. Statistics as well as Mathematics tin live used to solve or at to the lowest degree throw around lite upon the problems of line of piece of work organisation management. The way economical analysis tin live used towards solving line of piece of work organisation problems. Constitutes the dependent thing of Managerial Economics.

Definition of Managerial Economics

According to McNair as well as Meriam, "Managerial Economics consists of the utilization of economical modes of thought to analyse line of piece of work organisation situation."

Spencer as well as Siegelman direct hold defined Managerial Economics every bit "The integration of economical theory amongst line of piece of work organisation practise for the purpose of facilitating determination making as well as frontward planning past times management."

We may, thus define Managerial Economics every bit the bailiwick which deals amongst the application of economical theory to line of piece of work organisation management. Managerial Economics thus lies on the borderline betwixt economic science as well as line of piece of work organisation administration as well as serves every bit a yoke betwixt economic science as well as line of piece of work organisation management.

Chart 1 – Economics, Business Management as well as Managerial Economics.

Application of Economics to Business Management

The application of economic science to line of piece of work organisation administration or the integration of economical theory amongst line of piece of work organisation practice, every bit Spencer as well as Siegelman direct hold lay it, has the next aspects :-

1. Reconciling traditional theoretical concepts of economic science inward relation to the actual line of piece of work organisation behaviour as well as conditions. In economical theory, the technique of analysis is i of model edifice whereby sure as shooting assumptions are made as well as on that basis, conclusions every bit to the behaviour of the firms are drown. The assumptions, however, brand the theory of the line of piece of work solid unrealistic since it fails to provide a satisfactory explanation of that what the firms genuinely do. Hence the demand to reconcile the theoretical principles based on simplified assumptions amongst actual line of piece of work organisation practise as well as develops appropriate extensions as well as reformulation of economical theory, if necessary.
2. Estimating economical relationships, viz., criterion of diverse types of elasticities of demand such every bit cost elasticity, income elasticity, cross-elasticity, promotional elasticity, cost-output relationships, etc. The estimates of these economical relationships are to live used for purposes of forecasting.
3. Predicting relevant economical quantities, eg., profit, demand, production, costs, pricing, capital, etc., inward numerical terms together amongst their probabilities. As the line of piece of work organisation managing director has to piece of work inward an surroundings of uncertainty, futurity is to live predicted so that inward the lite of the predicted estimates, determination making as well as frontward planning may live possible.
4. Using economical quantities inward determination making as well as frontward planning, that is, formulating line of piece of work organisation policies and, on that basis, establishing line of piece of work organisation plans for the futurity pertaining to profit, prices, costs, capital, etc. The nature of economical forecasting is such that it indicates the grade of probability of diverse possible outcomes, i.e. losses or gains every bit a outcome of next each i of the strategies available. Hence, earlier a line of piece of work organisation managing director at that topographic point exists a quantified motion painting indicating the number o courses open, their possible outcomes as well as the quantified probability of each outcome. Keeping this motion painting inward view, he decides almost the strategy to live chosen.
5. Understanding meaning external forces constituting the surroundings inward which the line of piece of work organisation is operating as well as to which it must adjust, e.g., line of piece of work organisation cycles, fluctuations inward national income as well as authorities policies pertaining to world finance, financial policy as well as taxation, international economic science as well as unusual trade, monetary economics, labour relations, anti-monopoly measures, industrial licensing, cost controls, etc. The line of piece of work organisation managing director has to appraise the relevance as well as impact of these external forces inward relation to the special line of piece of work organisation unit of measurement as well as its line of piece of work organisation policies.

Characteristics of Managerial Economics

It would live useful to dot out sure as shooting main characteristics of Managerial Economics, inward every bit much it’s they throw farther lite on the nature of the dependent thing as well as assist inward a clearer agreement thereof.

1. Managerial Economics is micro-economic inward character.
2. Managerial Economics largely uses that body of economical concepts as well as principles, which is known every bit 'Theory of the firm' or 'Economics of the firm'. In addition, it also seeks to apply Profit Theory, which forms component of Distribution Theories inward Economics.
3. Managerial Economics is pragmatic. It avoids hard abstract issues of economical theory but involves complications ignored inward economical theory to human face the overall province of affairs inward which decisions are made. Economic theory appropriately ignores the multifariousness of backgrounds as well as preparation found inward private firms but Managerial Economics considers the special surroundings of determination making.
4. Managerial Economics belongs to normative economic science rather than positive economic science (also sometimes known every bit Descriptive Economics). In other words, it is prescriptive rather than descriptive. The main body of economical theory confines itself to descriptive hypothesis, attempting to generalize almost the relations amid dissimilar variables without judgment almost what is desirable or undesirable. For instance, the police of demand states that every bit cost increases. Demand goes downwards or vice-versa but this tilt does non tell whether the outcome is expert or bad. Managerial Economics, however, is concerned amongst what decisions ought to live made as well as hence involves value judgments.

Production as well as Supply

Production analysis is narrower inward reach than cost analysis. Production analysis oftentimes proceeds inward physical terms spell cost analysis proceeds inward monetary terms. Production analysis mainly deals amongst dissimilar production functions as well as their managerial uses.

Supply analysis deals amongst diverse aspects of provide of a commodity. Certain of import aspects of provide analysis are provide schedule, curves as well as function, police of provide as well as its limitations. Elasticity of provide as well as Factors influencing supply.

Pricing Decisions, Policies as well as Practices

Pricing is a really of import expanse of Managerial Economics. In fact, cost is the ness of the revenue of a line of piece of work solid as well as every bit such the success of a line of piece of work organisation line of piece of work solid largely depends on the correctness of the prices decisions taken past times it. The of import aspects dealt amongst nether this expanse are :- Price Determination inward diverse Market Forms, Pricing methods, Differential Pricing, Product-line Pricing as well as Price Forecasting.

Profit Management

Business firms are by as well as large organized for the purpose of making profits and, inward long run, profits provide the main stair out of success. In this connection, an of import dot worth considering is the chemical element of uncertainty exiting almost profits because of variations inward costs as well as revenues which, inward turn, are caused past times trunk both internal as well as external to the firm. If knowledge almost the futurity were fact, turn a profit analysis would direct hold been a really slowly task. However, inward a globe of certainty, expectations are non ever realized so that turn a profit planning as well as criterion constitute the hard are of Managerial Economics. The of import acts covered nether this expanse are :- Nature as well as Measurement of Profit, Profit Testing as well as Techniques of Profit Planning similar Break-Even Analysis.

Capital Management

Of the diverse types as well as classes of line of piece of work organisation problems, the most complex as well as able around for the line of piece of work organisation managing director are probable to live those relating to the firm’s investments. Relatively large sums are involved, as well as the problems are so complex that their disposal non entirely requires considerable fourth dimension as well as labour but is a term for top-level decision. Briefly, working capital missive of the alphabet administration implies planning as well as trolls of working capital missive of the alphabet expenditure. The main topics dealt amongst are :- Cost of Capital, Rate render as well as Selection of Project.

The diverse aspects outlined higher upwards stand upwards for the major uncertainties which a ness line of piece of work solid has to reckon with, viz., demand uncertainty, cost uncertainty, cost certainty, turn a profit uncertainty, as well as working capital missive of the alphabet uncertainty. We can, therefore, conclude the dependent thing of Managerial Economic consists of applying economical cripples as well as concepts towards adjusting amongst diverse uncertainties faced past times a ness firm.

Managerial Economics as well as Other Subjects

Yet around other useful method of throwing lite upon the nature as well as reach of Managerial Economics is to examine its human relationship amongst other subjects. In this connection, Economics, Statistics, Mathematics as well as Accounting deserve special mention.

Managerial Economics as well as Economics

Managerial Economics has been described every bit economic science applied to determination making. It may live viewed every bit a special branch of economic science bridging the gulf betwixt pure economical theory as well as managerial practice.

Economics has 2 main divisions :- (i) Microeconomics as well as (ii) Macroeconomics. Microeconomics has been defined every bit that branch of economic science where the unit of measurement of study is an private or a firm. Macroeconomics, on the other hand, is aggregate inward grapheme as well as has the entire economic scheme every bit a unit of measurement of study.

Microeconomics, also known every bit cost theory (or Marshallian economics) is the main rootage of concepts as well as analytical tools for managerial economics. To illustrate diverse micro-economic concepts such every bit elasticity of demand, marginal cost, the curt as well as the long runs, diverse marketplace forms, etc., all are of non bad significance to managerial economics. The main contribution of macroeconomics is inward the expanse of forecasting. The modern theory of income as well as job has straight implications for forecasting full general line of piece of work organisation conditions. As the prospects of an private line of piece of work solid often depend greatly on full general line of piece of work organisation conditions, private line of piece of work solid forecasts depend on full general line of piece of work organisation forecasts.

A survey inward the U.K has shown that line of piece of work organisation economists direct hold found the next economical concepts quite useful as well as of frequent application :-

1. Price elasticity of demand,
2. Income elasticity of demand,
3. Opportunity cost,
4. The multiplier,
5. Propensity to consume,
6. Marginal revenue product,
7. Speculative motive,
8. Production function,
9. Balanced growth, and
10. Liquidity preference.

Business economic science direct hold also found the next main areas of economic science every bit useful inward their piece of work :-

1. Demand theory,
2. Theory of the firm-price, output as well as investment decisions,
3. Business financing,
4. Public finance as well as financial policy,
5. Money as well as banking,
6. National income as well as social accounting,
7. Theory of international trade, and
8. Economics of developing countries.

Managerial Economics as well as Management Accounting

Managerial Economics is also closely related to accounting, which is concerned amongst recording the financial operations of a line of piece of work organisation firm. Indeed, accounting information is i of the principal sources of information required past times a managerial economist for his determination making purpose. For instance, the turn a profit as well as loss tilt of a line of piece of work solid tells how good the line of piece of work solid has done as well as the information it contains tin live used past times managerial economist to throw meaning lite on the futurity course of pedagogy of activity - whether it should improve or closed down. Of course, accounting information telephone band for careful interpretation. Recasting as well as adjustment earlier they tin live used safely as well as effectively.

It is inward this context that the growing link betwixt administration accounting as well as managerial economic science deserves special mention. The main task of administration accounting is at nowadays seen every bit beingness to provide the form of information which managers demand if they are to apply the ideas of managerial economic science to solve line of piece of work organisation problems correctly; the accounting information are also to live provided inward a shape so every bit to correspond easily into the concepts as well as analysis of managerial economics.

Uses of Managerial Economics

Managerial economic science accomplishes several objectives.

First, it presents those aspects of traditional economics, which are relevant for line of piece of work organisation determination making it existent life. For the purpose, it calls from economical theory the concepts, principles as well as techniques of analysis which direct hold a bearing on the determination making process. These are, if necessary, adapted or modified amongst a thought to enable the managing director accept improve decisions. Thus, managerial economic science accomplishes the objective of edifice suitable tool kit from traditional economics.

Secondly, it also incorporates useful ideas from other disciplines such a psychology, sociology, etc., if they are found relevant for determination making. In fact managerial economic science takes the assist of other academic disciplines having a bearing upon the line of piece of work organisation decisions of a managing director inward thought of the carious explicit as well as implicit constraints dependent to which resources allotment is to live optimized.

Thirdly, managerial economic science helps inward reaching a multifariousness of line of piece of work organisation decisions.

1. What products as well as services should live produced?
2. What inputs as well as production techniques should live used?
3. How much output should live produced as well as at what prices it should live sold?
4. What are the best sizes as well as locations of novel plants?
5. How should the available working capital missive of the alphabet live allocated?

Fourthly, managerial economic science makes a managing director a to a greater extent than competent model builder. Thus he tin capture the essential relationships which characterize a province of affairs spell leaving out the cluttering details as well as peripheral relationships.

Fifthly, at the flat of the firm, where for diverse functional areas functional specialists or functional departments exist, e.g., finance, marketing, personal production, etc., managerial economic science serves every bit an integrating agent past times coordinating the dissimilar areas as well as bringing to conduct on the decisions of each subdivision or specialist the implications pertaining to other functional areas. It thus enables line of piece of work organisation determination making non inward watertight compartments but inward an integrated perspective, the significance of which lies inward the fact that the functional departments or specialists often taste considerable autonomy as well as accomplish conflicting coals.

Finally, managerial economic science takes cognizance of the interaction betwixt the line of piece of work solid as well as lodge as well as accomplishes the substitution role of line of piece of work organisation every bit an agent inward the attainment of social as well as economical welfare. It has come upwards to live realized that line of piece of work organisation component from its obligations to shareholders has sure as shooting social obligations. Managerial economic science focuses attending on these social obligations every bit constraints dependent to which line of piece of work organisation decisions are to live taken. In so doing, it serves every bit an musical instrument inward rehiring the economical welfare of the lodge through socially oriented line of piece of work organisation decisions.

Role as well as Responsibilities of Managerial Economist

A managerial economist tin play a really of import role past times assisting the Management inward using the increasingly specialized skills as well as sophisticated techniques which are required to solve the hard problems of successful determination making as well as frontward planning. That is why, inward line of piece of work organisation concerns, his importance is beingness growingly recognized. In developed countries similar the U.S.A., large companies employ i or to a greater extent than economists. In our Earth (India) too, large industrial houses direct hold come upwards to recognize the demand for managerial economists, as well as at that topographic point are frequent advertisements for such positions. Tatas as well as Hindustan Lever employ economists. Indian Petrochemicals Corporation Ltd., a Government of Republic of Republic of India undertaking, also keeps an economist.

Let us examine inward specific terms how a managerial economist tin contribute to determination making inward business.

In this connection, 2 of import questions demand live considered :-

1. What role does he play inward business, that is, what special administration problems lend themselves to solution through economical analysis?
2. How tin the managerial economist best serve management, that is, what are the responsibilities of a successful managerial economist?

Role of Managerial Economist

One of the principal objectives of whatsoever administration inward its determination making procedure is to determine the substitution factors which volition influence the line of piece of work organisation over the menstruum ahead. In general, these factors tin live divided into 2 category, viz., (i) External as well as (ii) Internal. The external factors prevarication exterior the command administration because they are external to the line of piece of work solid as well as are said to constitute line of piece of work organisation environment. The internal factors prevarication inside the reach as well as operations of a line of piece of work solid as well as hence inside the command of management, as well as they are known every bit line of piece of work organisation operations.

To illustrate, a line of piece of work organisation line of piece of work solid is costless to accept decisions almost what to invest, where to invest, how much labour to employ as well as what to pay for it, how to cost its products as well as so on but all these decisions are taken inside the framework of a special line of piece of work organisation surroundings as well as the firm’s grade of liberty depends on such factors every bit the government’s economical policy, the actions of its competitors as well as the like.

Environmental Studies

An analysis as well as forecast of external factors constituting full general line of piece of work organisation conditions, e.g., prices, national income as well as output, book of trade, etc., are of non bad significance since every line of piece of work organisation from is affected past times them.

Certain of import relevant questions inward this connectedness are every bit follows :-

1. What is the outlook for the national economy? What are the most of import local, regional or worldwide economical trends? What stage of the line of piece of work organisation wheel lies directly ahead?
2. What almost population shifts as well as the resultant ups as well as downs inward regional purchasing power?
3. What are the demands prospects inward novel every bit good every bit established markets? Will changes inward social behaviour as well as fashions tend to expand or bound the sales of a company’s products, or mayhap brand the products obsolete?
4. Where are the marketplace as well as client opportunities probable to expand or contract most rapidly?
5. Will overseas markets expand or contract, as well as how volition novel unusual authorities legislation’s touching performance of the overseas plants?
6. Will the availability as well as cost of credit tend to increment or decrease buying? Are coin or credit weather condition ahead probable to live slowly or tight?
7. What the prices of raw materials as well as finished products are probable to be?
8. Is contest probable to increment or decrease?
9. What are the main components of the five-year plan? What are the areas where outlays direct hold been increased? What are the segments, which direct hold suffered a cutting inward their outlay?
10. What is the outlook regarding government’s economical policies as well as regulations?
11. What almost changes inward defence expenditure, taxation rates, tariffs as well as import restrictions?
12. Will Reserve Bank’s decisions receive or depress industrial production as well as consumer spending? How volition these decisions touching the company’s cost, credit, sales as well as profits?

Reasonably accurate answers to these as well as similar questions tin enable administration to chalk out to a greater extent than wisely the reach as well as administration of their ain line of piece of work organisation plans as well as to determine the timing of their specific actions. And it is these questions which introduce around of the areas where a managerial economist tin brand effective contribution.

The managerial economist has non entirely to study the economical trends at the macro flat but must also translate their relevance to the special manufacture / line of piece of work solid where he works. He has to digest the ever growing economical literature as well as propose overstep administration past times agency of short, line of piece of work organisation similar practical notes.

In a mixed economic scheme similar India, the managerial economist pragmatically interprets the intentions of controls as well as evaluates their impact. He acts every bit a yoke betwixt the authorities as well as the industry, translating the government’s intentions as well as transmitting the reactions of the industry. In fact, authorities policies accuse out of the performance of industry, the expectations of the people as well as political expediency.

Business Operations

A managerial economist tin also live helpful to the administration inward making decisions relating to the internal operations of a line of piece of work solid inward abide by of such problems every bit price, charge per unit of measurement of operations, investment, expansion or contraction.

Certain relevant questions inward this context would live every bit follows :-

1. What volition live a reasonable sales as well as turn a profit budget for the side past times side year?
2. What volition live the most appropriate production Schedules as well as inventory policies for the side past times side half-dozen months?
3. What changes inward wage as well as cost policies should live made now?
4. How much cash volition live available side past times side calendar month as well as how should it live invested?

Specific Functions

A farther thought of the role of managerial economists tin live seen from the next specific functions performed past times them every bit revealed past times a survey pertaining to Britain conducted past times K.J.W. Alexander as well as Alexander G. Kemp :-

1. Sales forecasting.
2. Industrial marketplace research.
3. Economic analysis of competing companies.
4. Pricing problems of industry.
5. Capital projects.
6. Production programs.
7. Security/investment analysis as well as forecasts.
8. Advice on merchandise as well as world relations.
9. Advice on primary commodities.
10. Advice on unusual exchange.
11. Economic analysis of agriculture.
12. Analysis of underdeveloped economics.
13. Environmental forecasting.

The managerial economist has to get together economical data, analyze all pertinent information almost the line of piece of work organisation surroundings as well as laid upwards seat papers on issues facing the line of piece of work solid as well as the industry. In the illustration of industries prone to rapid technological advances, he may direct hold to brand a continuous assessment of the impact of changing technology. He may direct hold to evaluate the working capital missive of the alphabet budget inward the lite of curt as well as long-range financial, turn a profit as well as marketplace potentialities. Very often, he may direct hold to laid upwards speeches for the corporate executives.

It is thus clear that inward practise managerial economists perform many as well as varied functions. However, of these, marketing functions, i.e., sales forecasting as well as industrial marketplace research, has been the most important. For this purpose, they may compile statistical records of the sales performance of their ain line of piece of work organisation as well as those relating to their rivals, send our analysis of these records as well as written report on trends inward demand, their marketplace shares, as well as the relative efficiency of their retail outlets. Thus spell carrying out their functions; they may direct hold to undertake detailed statistical analysis. There are, of course, differences inward the relative importance of the diverse functions performed from line of piece of work solid to line of piece of work solid as well as inward the grade of sophistication of the methods used inward carrying them out. But at that topographic point is no dubiety that the task of a managerial economist requires alertness as well as the mightiness to piece of work nether pressure.

Economic Intelligence

Besides these functions involving sophisticated analysis, managerial economist may also provide full general tidings service supplying administration amongst economical information of full general involvement such every bit competitors prices as well as products, taxation rates, tariff rates, etc. In fact, a expert bargain of published cloth is already available as well as it would live useful for a line of piece of work solid to direct hold someone who understands it. The managerial economist tin do the task amongst competence.

Participating inward Public Debates

Many well-known line of piece of work organisation economists participate inward world debates. Their advice as well as views are beingness sought past times the authorities as well as lodge alike. Their practical sense inward line of piece of work organisation as well as manufacture ads stature to their views. Their world recognition enhances their stature inward the organisation itself.

Indian Context

In the indian context, a managerial economist is expected to perform the next functions :-

1. Macro-forecasting for demand as well as supply.
2. Production planning at macro as well as micro levels.
3. Capacity planning as well as product-mix determination.
4. Economics of diverse productions lines.
5. Economic feasibility of novel production lines/processes as well as projects.
6. Assistance inward preparation of overall evolution plans.
7. Preparation of periodical economical reports bearing on diverse matters such every bit the company’s product-lines, futurity growth opportunities, marketplace pricing situation, full general business, as well as diverse national/international factors affecting manufacture as well as business.
8. Preparing briefs, speeches, articles as well as papers for overstep administration for diverse Chambers, Committees, Seminars, Conferences, etc.
9. Keeping administration informed o diverse national as well as international developments on economic/industrial matters.

With the adoption of the New Economic Policy, inward 1991, the macro-economic Environment inward Republic of Republic of India is changing fast at a stride that has been rarely witnessed before. And these changes direct hold tremendous implications for business. The managerial economist has to play a much to a greater extent than meaning role. He has to constantly gauge the possibilities of translating the rapidly changing economical scenario into feasible line of piece of work organisation opportunities. As Republic of Republic of India marches towards globalization, he volition direct hold to translate the global economical events as well as notice out how his line of piece of work solid tin avail itself of the carious export opportunities or of establishing plants abroad either wholly owned or inward association amongst local partners.

Responsibilities of Managerial Economist

Having examined the meaning opportunities earlier a managerial economist to contribute to managerial determination making, permit us at nowadays examine how he tin best serve the management. For this, he must thoroughly recognize his responsibilities as well as obligations.

A managerial economist tin serve administration best entirely if he ever keeps inward heed the main objective of his business, viz., to brand a turn a profit on its invested capital. His academic preparation as well as the critical comments from people exterior the line of piece of work organisation may Pb a managerial economist to adopt an apologetic or defensive mental attitude towards profits. Once administration notices this, his effectiveness is almost sure as shooting to live lost. In fact, he cannot expression to succeed inward serving administration unless he has a strong personal conviction that profits are essential as well as that his main obligation is to assist elevate the mightiness of the line of piece of work solid to brand profits.

Most administration decisions necessarily concern the future, which is rather uncertain. It is, therefore, absolutely essential that a managerial economist recognizes his responsibleness to brand successful forecasts. By making best possible forecasts as well as through constant efforts to improve upon them, he should aim at minimizing, if non completely eliminating, the risks involved inward uncertainties, so that the administration tin follow a to a greater extent than orderly course of pedagogy of line of piece of work organisation planning. At times, he volition direct hold to reassure the administration that an of import tendency volition continue; inward other cases, he may direct hold to dot out the probabilities of a turning dot inward around activity of importance to management. In whatsoever case, he must live willing to brand considered but fairly positive statements almost impending economical developments, based upon the best possible information as well as analysis as well as stake his reputation upon his judgment. Nothing volition create administration confidence inward a managerial economist to a greater extent than chop-chop as well as thoroughly than a tape of successful forecasts, well-documented inward advance as well as modestly evaluated when the actual results acquire available.

A few corollaries to the higher upwards proffer demand also live emphasized here.

First, he has a major responsibleness to "alert administration at the earliest possible moment" inward illustration he discovers an fault inward his forecast. By promptly drawing attending to changes inward forecasting conditions, he volition non entirely assist administration inward making appropriate adjustment inward policies as well as programs but volition also live able to strengthen his ain seat every bit a fellow member of the administration squad past times keeping his fingers on the economical pulse of the business.

Secondly, he must constitute as well as maintain many contacts amongst individuals as well as information sources, which would non live directly available to the other members of the management. Extensive familiarity amongst reference sources as well as cloth is essential, but it is silent to a greater extent than of import that he knows individuals who are specialists inward special fields having a bearing on his work. For this purpose, he should bring together professional person associations as well as accept active component inward them. In fact, i of the best agency of determining the caliber of a managerial economist is to evaluate his mightiness to obtain information chop-chop past times personal contacts rather than past times lengthy enquiry from either readily available or obscure reference sources. Within whatsoever business, at that topographic point may live a wealth of knowledge as well as sense but the managerial economist would live genuinely useful if he tin supplement the existing know-how amongst additional information as well as inward the quickest possible manner.

Again, if a managerial economist is to live genuinely helpful to the administration inward successful determination making as well as frontward planning, he must live able to earn total status on the line of piece of work organisation team. He should live laid upwards as well as fifty-fifty offering himself to accept upwards special assignments, live that inward study teams, committees or special projects. For, a managerial economist tin entirely component effectively inward an atmosphere where his success or failure tin live traced non entirely to his basic ability, preparation as well as experience, but also to his personality as well as capacity to win continuing back upwards for himself as well as his professional person ideas. Of course, he should live able to limited himself clearly as well as exactly as well as must ever seek to minimize the utilization of technical terminology inward communicating amongst his administration executives. For, it is well-known that if administration does non understand, it volition almost automatically reject. Further, spell intellectually he must live inward melody amongst industry’s thinking the wider national perspective should non live absents from his advice to overstep management.

Questions on Managerial Economics

1. Define managerial economic science amongst definition.
2. How does managerial economic science differ from economics?
3. Write a curt authorities notation on managerial economist.
4. Explain the reach of managerial economics.
5. Explain role as well as responsibilities of managerial economist.

Article Source :- My university's costless study notes on managerial economics, Sem I, 2009-2010. Article sharing motto is to assist students or readers to larn as well as understand, the basics of Managerial Economics, via self-study.

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