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What is the difference between internal economics and external economics in managerial economics?
There's a lot of difference between Internal Economics And Managerial Economics. Internal Economics: It is economics related to an individual firm...where it is the practice of day to day operations in medium of puting various amount of inputs for a desireable output. Managerial Economics:It is the economics which is the practice of managing the firm,by divsion of labour and application of certain principles of management in day to day work.
How managerial economics is link with other academic disciplines?
1. Relationship with economics:The relationship between managerial economics and economics theory may be viewed form the point of view of the two approaches to the subject Viz. Micro Economics and Marco Economics. Microeconomics is the study of the economic behavior of individuals, firms and other such micro organizations. Managerial economics is rooted in Micro Economic theory. Managerial Economics makes use to several Micro Economic concepts such as marginal cost, marginal revenue, elasticity of demand as well as price theory and theories of market structure to name only a few. Macro theory on the other hand is the study of the economy as a whole. It deals with the analysis of national income, the level of employment, general price level, consumption and investment in the economy and even matters related to international trade, Money, public finance, etc.The relationship between managerial economics and economics theory is like that of engineering science to physics or of medicine to biology. Managerial economics has an applied bias and its wider scope lies in applying economic theory to solve real life problems of enterprises. Both managerial economics and economics deal with problems of scarcity and resource allocation.2. Management theory and accounting:Managerial economics has been influenced by the developments in management theory and accounting techniques. Accounting refers to the recording of pecuniary transactions of the firm in certain books. A proper knowledge of accounting techniques is very essential for the success of the firm because profit maximization is the major objective of the firm.Managerial Economics requires a proper knowledge of cost and revenue information and their classification. A student of managerial economics should be familiar with the generation, interpretation and use of accounting data. The focus of accounting within the firm is fast changing from the concepts of store keeping to that if managerial decision making, this has resulted in a new specialized area of study called "Managerial Accounting".3. Managerial Economics and mathematics:The use of mathematics is significant for managerial economics in view of its profit maximization goal long with optional use of resources. The major problem of the firm is how to minimize cost, hoe to maximize profit or how to optimize sales. Mathematical concepts and techniques are widely used in economic logic to solve these problems. Also mathematical methods help to estimate and predict the economic factors for decision making and forward planning.Mathematical symbols are more convenient to handle and understand various concepts like incremental cost, elasticity of demand etc., Geometry, Algebra and calculus are the major branches of mathematics which are of use in managerial economics. The main concepts of mathematics like logarithms, and exponentials, vectors and determinants, input-output models etc., are widely used. Besides these usual tools, more advanced techniques designed in the recent years viz. linear programming, inventory models and game theory fine wide application in managerial economics.4. Managerial Economics and Statistics:Managerial Economics needs the tools of statistics in more than one way. A successful businessman must correctly estimate the demand for his product. He should be able to analyses the impact of variations in tastes. Fashion and changes in income on demand only then he can adjust his output. Statistical methods provide and sure base for decision-making. Thus statistical tools are used in collecting data and analyzing them to help in the decision making process.Statistical tools like the theory of probability and forecasting techniques help the firm to predict the future course of events. Managerial Economics also make use of correlation and multiple regressions in related variables like price and demand to estimate the extent of dependence of one variable on the other. The theory of probability is very useful in problems involving uncertainty.5. Managerial Economics and Operations Research:Taking effectives decisions is the major concern of both managerial economics and operations research. The development of techniques and concepts such as linear programming, inventory models and game theory is due to the development of this new subject of operations research in the postwar years. Operations research is concerned with the complex problems arising out of the management of men, machines, materials and money.Operation research provides a scientific model of the system and it helps managerial economists in the field of product development, material management, and inventory control, quality control, marketing and demand analysis. The varied tools of operations Research are helpful to managerial economists in decision-making.6. Managerial Economics and the theory of Decision- making:The Theory of decision-making is a new field of knowledge grown in the second half of this century. Most of the economic theories explain a single goal for the consumer i.e., Profit maximization for the firm. But the theory of decision-making is developed to explain multiplicity of goals and lot of uncertainty.As such this new branch of knowledge is useful to business firms, which have to take quick decision in the case of multiple goals. Viewed this way the theory of decision making is more practical and application oriented than the economic theories.7. Managerial Economics and Computer Science:Computers have changes the way of the world functions and economic or business activity is no exception. Computers are used in data and accounts maintenance, inventory and stock controls and supply and demand predictions. What used to take days and months is done in a few minutes or hours by the computers. In fact computerization of business activities on a large scale has reduced the workload of managerial personnel. In most countries a basic knowledge of computer science, is a compulsory programme for managerial trainees.To conclude, managerial economics, which is an offshoot traditional economics, has gained strength to be a separate branch of knowledge. It strength lies in its ability to integrate ideas from various specialized subjects to gain a proper perspective for decision-making.A successful managerial economist must be a mathematician, a statistician and an economist. He must be also able to combine philosophic methods with historical methods to get the right perspective only then; he will be good at predictions. In short managerial practices with the help of other allied sciences.
What is the scope of managerial economics in the field of engineering?
costs:- technology has multi-dimensional impact on costs, one hand technology determines what combination of various factor is to be used e.g capital -intensive technology or labor intensive technology
What are the various demand forecasting techniques?
Qualitative TechniquesUnaided judgements/Expert Opinion/Hunch MethodCollective OpinionPrediction MarketsDelphi TechniqueJudgementatl BootstrapingSimulated InteractionsConjoint AnalysisTest Marketing Buyer's intentionsConsumer ClinicsNeuro ScienceMarket ExperimentsVirtual Shopping and Virtual ManagementTime SeriesMoving AveragesLeading Indicator MethodCorrelation and Regression EquationsExtrapolationQuantitative Techniques
Define Managerial Economics and discuss its importance and functions?
Managerial economics (sometimes referred to as business economics), is a branch of economics that applies microeconomic analysis to decision methods of businesses or other management units. As such, it bridges economic theory and economics in practice. It draws heavily from quantitative techniques such as regression analysis and correlation, Lagrangian calculus (linear). If there is a unifying theme that runs through most of managerial economics it is the attempt to optimize business decisions given the firm's objectives and given constraints imposed by scarcity, for example through the use of operations research and programming. Almost any business decision can be analyzed with managerial economics techniques, but it is most commonly applied to: * Risk analysis - various models are used to quantify risk and asymmetric information and to employ them in decision rules to manage risk. * Production analysis - microeconomic techniques are used to analyze production efficiency, optimum factor allocation, costs, and economies of scale and to estimate the firm's cost function. * Pricing analysis - microeconomic techniques are used to analyze various pricing decisions including transfer pricing, joint product pricing, price discrimination, price elasticity estimations, and choosing the optimum pricing method. * Capital budgeting - Investment theory is used to examine a firm's capital purchasing decisions. At universities, the subject is taught primarily to advanced undergrads. It is approached as an integration subject. That is, it integrates many concepts from a wide variety of prerequisite courses. In many countries it is possible to read for a degree in Business Economics which often covers managerial economics, financial economics, game theory, business forecasting and industrial economics. Importance of the study of Managerial Economics: Managerial Economics does not give importance to the study of theoretical economic concepts. Its main concern is to apply theories to find solutions to day -today practical problems faced by a firm. The following points indicate the significance of the study of this subject in its right perspective. 1. It gives guidance for identification of key variables in decision making process. 2. It helps the business executives to understand the various intricacies of business and managerial problems and to take right decision at the right time. 3. It provides the necessary conceptual, technical skills, toolbox of analysis and techniques of thinking and other such most modern tools and instruments like elasticity of demand and supply, cost and revenue, income and expenditure, profit and volume of production etc to solve various business problems. 4. It is both a science and an art. In the context of globalization, privatization, liberalization and marketization and a highly competitive dynamic economy, it helps in identifying various business and managerial problems, their causes and consequence, and suggests various policies and programs to overcome them. 5. It helps the business executives to become much more responsive, realistic and competent to face the ever changing challenges in the modern business world. 6. It helps in the optimum use of scarce resources of a firm to maximize its profits. 7. It also helps in achieving other objectives a firm like attaining industry leadership, market share expansion and social responsibilities etc. 8. It helps a firm in forecasting the most important economic variables like demand, supply, cost, revenue, price, sales and profit etc and formulate sound business polices 9. It also helps in understanding the various external factors and forces which affect the decision making of a firm. Thus, it has become a highly useful and practical discipline in recent years to analyze and find solutions to various kinds of problems in a systematic and rational manner. There are mainly two functions of managerial economics. Out of two major managerial functions served by the subject matter under managerial economics are decision making and forward planning: 1. Decision Making:- The techniques in this section help you to make the best decisions possible with the information you have available. With these tools you will be able to map out the likely consequences of decisions, work out the importance of individual factors, and choose the best course of action to take. == There are several basic kinds of decisions. 1. Decisions whether. This is the yes/no, either/or decision that must be made before we proceed with the selection of an alternative. Should I buy a new TV? Should I travel this summer? Decisions whether are made by weighing reasons pro and con. The PMI technique discussed in the next chapter is ideal for this kind of decision. It is important to be aware of having made a decision whether, since too often we assume that decision making begins with the identification of alternatives, assuming that the decision to choose one has already been made. 2. Decisions which. These decisions involve a choice of one or more alternatives from among a set of possibilities, the choice being based on how well each alternative measures up to a set of predefined criteria. 3. Contingent decisions. These are decisions that have been made but put on hold until some condition is met. 2. Forward Planning:- The term 'planning' implies a consciously directed activity with certain predetermined goals and means to carry them out. It is a deliberate activity. It is a programmed action. Basically planning is concerned with tackling future situations in a systematic manner. Forward planning implies planning in advance for the future. It is associated with deciding the future course of action of a firm. It is prepared on the basis of past and current experience of a firm. It is prepared in the background of uncertain and unpredictable environment and guess work. Future events and happenings cannot be predicted accurately. The success or failure of the future plan depends on a number of factors and forces which are unknown in nature. Much of economic activity is forward looking. Every time we build a new factory, add to the stocks of inputs, trucks, computers or improvements in R&D, our intension is to enhance the future productivity of the firm. Growing firms devote a significant share of their current output to net capital formation to bolster future economic output. A business executive must be sufficiently intelligent enough to think in advance, prepare a sound plan and take all possible precautionary measures to meet all types of challenges of the future business. Hence, forward planning has acquired greater significance in business circles.
What is the difference between internal economics and external economics in managerial economics?
There's a lot of difference between Internal Economics And Managerial Economics. Internal Economics: It is economics related to an individual firm...where it is the practice of day to day operations in medium of puting various amount of inputs for a desireable output. Managerial Economics:It is the economics which is the practice of managing the firm,by divsion of labour and application of certain principles of management in day to day work.
How the four managerial tasks relate to the various managerial levels and allocation of time?
How the four managerial tasks relate to the various managerial levels and allocation of time?
How managerial economics is link with other academic disciplines?
1. Relationship with economics:The relationship between managerial economics and economics theory may be viewed form the point of view of the two approaches to the subject Viz. Micro Economics and Marco Economics. Microeconomics is the study of the economic behavior of individuals, firms and other such micro organizations. Managerial economics is rooted in Micro Economic theory. Managerial Economics makes use to several Micro Economic concepts such as marginal cost, marginal revenue, elasticity of demand as well as price theory and theories of market structure to name only a few. Macro theory on the other hand is the study of the economy as a whole. It deals with the analysis of national income, the level of employment, general price level, consumption and investment in the economy and even matters related to international trade, Money, public finance, etc.The relationship between managerial economics and economics theory is like that of engineering science to physics or of medicine to biology. Managerial economics has an applied bias and its wider scope lies in applying economic theory to solve real life problems of enterprises. Both managerial economics and economics deal with problems of scarcity and resource allocation.2. Management theory and accounting:Managerial economics has been influenced by the developments in management theory and accounting techniques. Accounting refers to the recording of pecuniary transactions of the firm in certain books. A proper knowledge of accounting techniques is very essential for the success of the firm because profit maximization is the major objective of the firm.Managerial Economics requires a proper knowledge of cost and revenue information and their classification. A student of managerial economics should be familiar with the generation, interpretation and use of accounting data. The focus of accounting within the firm is fast changing from the concepts of store keeping to that if managerial decision making, this has resulted in a new specialized area of study called "Managerial Accounting".3. Managerial Economics and mathematics:The use of mathematics is significant for managerial economics in view of its profit maximization goal long with optional use of resources. The major problem of the firm is how to minimize cost, hoe to maximize profit or how to optimize sales. Mathematical concepts and techniques are widely used in economic logic to solve these problems. Also mathematical methods help to estimate and predict the economic factors for decision making and forward planning.Mathematical symbols are more convenient to handle and understand various concepts like incremental cost, elasticity of demand etc., Geometry, Algebra and calculus are the major branches of mathematics which are of use in managerial economics. The main concepts of mathematics like logarithms, and exponentials, vectors and determinants, input-output models etc., are widely used. Besides these usual tools, more advanced techniques designed in the recent years viz. linear programming, inventory models and game theory fine wide application in managerial economics.4. Managerial Economics and Statistics:Managerial Economics needs the tools of statistics in more than one way. A successful businessman must correctly estimate the demand for his product. He should be able to analyses the impact of variations in tastes. Fashion and changes in income on demand only then he can adjust his output. Statistical methods provide and sure base for decision-making. Thus statistical tools are used in collecting data and analyzing them to help in the decision making process.Statistical tools like the theory of probability and forecasting techniques help the firm to predict the future course of events. Managerial Economics also make use of correlation and multiple regressions in related variables like price and demand to estimate the extent of dependence of one variable on the other. The theory of probability is very useful in problems involving uncertainty.5. Managerial Economics and Operations Research:Taking effectives decisions is the major concern of both managerial economics and operations research. The development of techniques and concepts such as linear programming, inventory models and game theory is due to the development of this new subject of operations research in the postwar years. Operations research is concerned with the complex problems arising out of the management of men, machines, materials and money.Operation research provides a scientific model of the system and it helps managerial economists in the field of product development, material management, and inventory control, quality control, marketing and demand analysis. The varied tools of operations Research are helpful to managerial economists in decision-making.6. Managerial Economics and the theory of Decision- making:The Theory of decision-making is a new field of knowledge grown in the second half of this century. Most of the economic theories explain a single goal for the consumer i.e., Profit maximization for the firm. But the theory of decision-making is developed to explain multiplicity of goals and lot of uncertainty.As such this new branch of knowledge is useful to business firms, which have to take quick decision in the case of multiple goals. Viewed this way the theory of decision making is more practical and application oriented than the economic theories.7. Managerial Economics and Computer Science:Computers have changes the way of the world functions and economic or business activity is no exception. Computers are used in data and accounts maintenance, inventory and stock controls and supply and demand predictions. What used to take days and months is done in a few minutes or hours by the computers. In fact computerization of business activities on a large scale has reduced the workload of managerial personnel. In most countries a basic knowledge of computer science, is a compulsory programme for managerial trainees.To conclude, managerial economics, which is an offshoot traditional economics, has gained strength to be a separate branch of knowledge. It strength lies in its ability to integrate ideas from various specialized subjects to gain a proper perspective for decision-making.A successful managerial economist must be a mathematician, a statistician and an economist. He must be also able to combine philosophic methods with historical methods to get the right perspective only then; he will be good at predictions. In short managerial practices with the help of other allied sciences.
Discuss how the four managerial tasks relate to the various managerial levels and allocation of time?
Discuss how the four managerial tasks relate to the various managerial levels and allocation of time?
Nature and scope of environmental economics?
Nature of Business Economics :Traditional economic theory has developed along two lines; viz., normative and positive. Normative focuses on prescriptive statements, and help establish rules aimed at attaining the specified goals of business. Positive, on the other hand, focuses on description it aims at describing the manner in which the economic system operates without staffing how they should operate.The emphasis in business economics is on normative theory. Business economic seeks to establish rules which help business firms attain their goals, which indeed is also the essence of the word normative. However, if the firms are to establish valid decision rules, they must thoroughly understand their environment. This requires the study of positive or descriptive theory. Thus, Business economics combines the essentials of the normative and positive economic theory, the emphasis being more on the former than the latter.Scope of Business Economics :As regards the scope of business economics, no uniformity of views exists among various authors. However, the following aspects are said to generally fall under business economics.1. Demand Analysis and Forecasting2. Cost and production Analysis.3. Pricing Decisions, policies and practices.4. Profit Management.5. Capital Management.
What is the scope of managerial economics in the field of engineering?
costs:- technology has multi-dimensional impact on costs, one hand technology determines what combination of various factor is to be used e.g capital -intensive technology or labor intensive technology
What is quantitative technique forecasting?
Quantitative technique forecasting involves using mathematical models and statistical methods to predict future events based on historical data. This approach relies on numerical data and often employs techniques such as time series analysis, regression analysis, and econometric modeling. It is commonly used in various fields, including finance, economics, and supply chain management, to make informed decisions by identifying trends and patterns in the data. The accuracy of quantitative forecasts typically improves as the quality and quantity of historical data increase.
Planning versus forecasting?
Planning and forecasting are two principles that have to work together. During planning of financial projects forecasting will be used to estimate various aspects of the project and so on.
What are the various demand forecasting techniques?
Qualitative TechniquesUnaided judgements/Expert Opinion/Hunch MethodCollective OpinionPrediction MarketsDelphi TechniqueJudgementatl BootstrapingSimulated InteractionsConjoint AnalysisTest Marketing Buyer's intentionsConsumer ClinicsNeuro ScienceMarket ExperimentsVirtual Shopping and Virtual ManagementTime SeriesMoving AveragesLeading Indicator MethodCorrelation and Regression EquationsExtrapolationQuantitative Techniques
What is time series method of forecasting?
Fashion forecasters look at what other designers are doing, and what people on the streets are wearing.
Define Managerial Economics and discuss its importance and functions?
Managerial economics (sometimes referred to as business economics), is a branch of economics that applies microeconomic analysis to decision methods of businesses or other management units. As such, it bridges economic theory and economics in practice. It draws heavily from quantitative techniques such as regression analysis and correlation, Lagrangian calculus (linear). If there is a unifying theme that runs through most of managerial economics it is the attempt to optimize business decisions given the firm's objectives and given constraints imposed by scarcity, for example through the use of operations research and programming. Almost any business decision can be analyzed with managerial economics techniques, but it is most commonly applied to: * Risk analysis - various models are used to quantify risk and asymmetric information and to employ them in decision rules to manage risk. * Production analysis - microeconomic techniques are used to analyze production efficiency, optimum factor allocation, costs, and economies of scale and to estimate the firm's cost function. * Pricing analysis - microeconomic techniques are used to analyze various pricing decisions including transfer pricing, joint product pricing, price discrimination, price elasticity estimations, and choosing the optimum pricing method. * Capital budgeting - Investment theory is used to examine a firm's capital purchasing decisions. At universities, the subject is taught primarily to advanced undergrads. It is approached as an integration subject. That is, it integrates many concepts from a wide variety of prerequisite courses. In many countries it is possible to read for a degree in Business Economics which often covers managerial economics, financial economics, game theory, business forecasting and industrial economics. Importance of the study of Managerial Economics: Managerial Economics does not give importance to the study of theoretical economic concepts. Its main concern is to apply theories to find solutions to day -today practical problems faced by a firm. The following points indicate the significance of the study of this subject in its right perspective. 1. It gives guidance for identification of key variables in decision making process. 2. It helps the business executives to understand the various intricacies of business and managerial problems and to take right decision at the right time. 3. It provides the necessary conceptual, technical skills, toolbox of analysis and techniques of thinking and other such most modern tools and instruments like elasticity of demand and supply, cost and revenue, income and expenditure, profit and volume of production etc to solve various business problems. 4. It is both a science and an art. In the context of globalization, privatization, liberalization and marketization and a highly competitive dynamic economy, it helps in identifying various business and managerial problems, their causes and consequence, and suggests various policies and programs to overcome them. 5. It helps the business executives to become much more responsive, realistic and competent to face the ever changing challenges in the modern business world. 6. It helps in the optimum use of scarce resources of a firm to maximize its profits. 7. It also helps in achieving other objectives a firm like attaining industry leadership, market share expansion and social responsibilities etc. 8. It helps a firm in forecasting the most important economic variables like demand, supply, cost, revenue, price, sales and profit etc and formulate sound business polices 9. It also helps in understanding the various external factors and forces which affect the decision making of a firm. Thus, it has become a highly useful and practical discipline in recent years to analyze and find solutions to various kinds of problems in a systematic and rational manner. There are mainly two functions of managerial economics. Out of two major managerial functions served by the subject matter under managerial economics are decision making and forward planning: 1. Decision Making:- The techniques in this section help you to make the best decisions possible with the information you have available. With these tools you will be able to map out the likely consequences of decisions, work out the importance of individual factors, and choose the best course of action to take. == There are several basic kinds of decisions. 1. Decisions whether. This is the yes/no, either/or decision that must be made before we proceed with the selection of an alternative. Should I buy a new TV? Should I travel this summer? Decisions whether are made by weighing reasons pro and con. The PMI technique discussed in the next chapter is ideal for this kind of decision. It is important to be aware of having made a decision whether, since too often we assume that decision making begins with the identification of alternatives, assuming that the decision to choose one has already been made. 2. Decisions which. These decisions involve a choice of one or more alternatives from among a set of possibilities, the choice being based on how well each alternative measures up to a set of predefined criteria. 3. Contingent decisions. These are decisions that have been made but put on hold until some condition is met. 2. Forward Planning:- The term 'planning' implies a consciously directed activity with certain predetermined goals and means to carry them out. It is a deliberate activity. It is a programmed action. Basically planning is concerned with tackling future situations in a systematic manner. Forward planning implies planning in advance for the future. It is associated with deciding the future course of action of a firm. It is prepared on the basis of past and current experience of a firm. It is prepared in the background of uncertain and unpredictable environment and guess work. Future events and happenings cannot be predicted accurately. The success or failure of the future plan depends on a number of factors and forces which are unknown in nature. Much of economic activity is forward looking. Every time we build a new factory, add to the stocks of inputs, trucks, computers or improvements in R&D, our intension is to enhance the future productivity of the firm. Growing firms devote a significant share of their current output to net capital formation to bolster future economic output. A business executive must be sufficiently intelligent enough to think in advance, prepare a sound plan and take all possible precautionary measures to meet all types of challenges of the future business. Hence, forward planning has acquired greater significance in business circles.
Describe the various programming techniques briefly?
describe the various programming techniques briefly.
