Role of Managerial Economics in Decision Making

2.  Managerial Economics - Managerial economics deals with the application of the
economic concepts, theories, tools, and methodologies to solve practical problems
in a business. In other words, managerial economics is the combination of
economics theory and managerial theory.
 Decision Making - Decision making is the process of making choices by
identifying a decision, gathering information, and assessing alternative resolutions.
 Per Capita Income - measures the average income earned per person in a given
area (city, region, country, etc.) in a specified year. It is calculated by dividing the
area's total income by its total population

3.  Minimizes risk and uncertainity
 Helpful in Analysis of Effects of Government Policies
 Helpful in Profit Planning and Control
 Useful In Demand for Casting
 Helpful in Cost Control
 Measurement of the Efficiency of the Firm

4.  Risk – Situation where there is more than one possible outcome to a decision and
the probability of each outcome is known
 Uncertainty – Situation where there is more than one possible outcome to a decision
and the probability of each outcome is unknown
 Managerial Economics helps in minimizing risk by measuring risk that the business
can meet, these can be caused by the following;
 Economic atmosphere in the country
 By measuring the per capita income

5.  Managerial Economics helps in analyzing the effect of the various policies
of the Government in the operation of the business sector.
 When The government changes policies Managerial Economics exploits
this easily and benefits the business.
 Government policies may use tax incentives to direct economic conditions, this is when
economic managers can either decrease or increase production

6.  Managerial economics helps managers to decide on the planning
and control of the benefits.
 Managerial Economics is synchronized between the planning and
control of any institution or firm and hence its importance increases.

7.  Managerial economics provides useful tools for economics managers in
demand forecasts and is useful in demanding production planning.
 The managerial economy deals with future losses easily. So that any
business can be protected against future losses.

8.  It is the job of managerial economics to say how much to spend in
business and how to spend those expenses so that it can get more profit at
lower costs and increase business growth.
 Managerial economics decides the business is going towards profit or loss.
managerial economics decides which way is good for the business.
 And it is only possible when managerial economics plays a very big and
important role in cost control decisions.

9.  Managerial Economics provides useful tools for managers in measuring
the efficiency of the business firm. Managerial Economics plays big salient
features and significance of managerial economics In Choosing Right
Decisions in helping business in many ways.
 It shows the firm’s successful operation;
› Demand forecasting,
› Business planning
› Profit maximization and economic well-being.

10.  19 Role And Importance Of Managerial Economics -
https://www.googlesir.com/role-importance-managerial-
economics/
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