issue trade sanctions against the violating country. Capital budgeting—Investment theory is used to examine a firm’s capital purchasing decisions. On the contrary, in managerial economics, which is also called applied micro-economics (or price theory at the service of business executives), the focus is on how decisions should be made by management in order to achieve the firm’s profit maximization goals. To the extent that professional manag­ers are motivated to relate their behaviour to the goals of shareholders, profit maximization can be treated as the operational goal of the firm. On the contrary, the pri­mary goal of a non-profit organization like a foun­dation would be to fulfil a mission or to further some cause. This website includes study notes, research papers, essays, articles and other allied information submitted by visitors like YOU. Baumol argued on the basis of his experience as a manage­ment consultant that maximization of sales rather than maximization of profits is a common manage­rial goal, and perhaps more appropriate. For instance, economic forces in the marketplace determine the demand for products, the prices of resources, costs of production, the number of rival firms, the nature of pricing strategies and ultimately the profitability of business investments. There are five main functional areas of management viz., human resource, production office, finance and marketing; which have been discussed below. University Press by Dominick Salvatore, Managerial Economics in a Global Perspective, fifth edition. Whether decision-making is directed toward maximizing wealth, sales, management perquisite, or Sam Smith’s salary, there is still a need for effi­cient allocation of a firm’s limited resources. In most real-life markets a firm has to re­duce the price of the product to sell more. Weather has obviously been one of the most important drivers of human civilization since the beginning of... Philcoman gives Management Man of the Year Award to Manila Mayor Moreno, For new Ford Philippines managing director, focus on customer experience is foremost, SMART SOLUTIONS FOR SMARTER BUSINESS | Unleashing the fullest potential of Filipino enterprises, Impact of extreme rainfall days on the well-being of households in the formal and informal sectors, Majah-Leah V. Ravagoa and Gerald Gracius Pascua, Loubill Dayne Aceron, Emilio Gozo, Faye Cruz and Gemma Narisma. Such expenditure may involve lakhs or crores of rupees. Economics, Microeconomics, Managerial Economics. In the short run he may be interested in estimating demand and cost relation­ships with a view to making decisions about the price to be charged for a product and the quantity of output to be produced. business on how these functional areas should interact to one another as the The goals of a production manager may be: (1) Completion of delivery schedule on time, (2) Minimization of the sum of capital investment expenditures, operating costs and in-process invent­ory costs and. In other companies business economists may collaborate with outside consultants who generate the demand forecasts. It en­ables one to learn practical applications of concepts studied in micro and macroeconomic theory. Students who choose business as a career will also find economics extremely useful. Our title makes many references to such microeconomic concepts as elasticity of de­mand, cost, short run and long runs profits and mar­ket structures. Just as production decision is a short-term deci­sion, capital investment decision is a long-term de­cision. But they have a com­mon interest: they have the need for some reliable (though not totally perfect or accurate) estimates of the demand for the product being sold by the firm. Any model or theory must necessarily simplify. The two terms ‘managerial’ economics and ‘busi­ness’ economics are often used interchangeably. Managerial economics emphasizes the principles of economics that underlie managerial practice. Managerial economics provides management with a strategic planning tool that can be fruitfully utilised to gain a clearer perspective of the way the world at large works, and what can be done to maintain profitability in an ever-changing envi­ronment. It seems that the subject will become more and more popular in future. The environmental factors or environmental ele­ments in the decision making process assume great­er complexity when a firm’s management is contem­plating new investments. A business manager has to take both short-term and long-term decisions. It provides the practicing manager with those tools and techniques which are useful in day-to-day decision making. The primary emphasis in microeconomics or price theory is on individual behaviour — how in­dividual decisions of buyers and sellers lead (or of­ten fail to lead) to efficient allocation of goods and factors among consumers and private business firms, and, in the process, maximization of society’s wel­fare (i.e., the maximization of the sum total of ben­efits to all members of society). Meaning 2. Microeconomics which deals with demand theory and with the theory of cost and production is extremely helpful for making such decisions. This point is illustrated in Fig. It studies such broad aggregates as total output (GDP), national income, employment and unemployment, the general price level as also the growth of the economy. This means that WTO rules


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