Chapter 1 - Chapter 1: Introduction to Managerial...

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Chapter 1: Introduction to Managerial Economics. Manager can’t succeed without understanding how the market work s Market forces = demand and supply. They determine: 1. The demand for products, 2. The cost of production and the prices of resources. 3. The number of rival firms 4. Nature of pricing strategy 5. The profitability of business investments What is managerial economics? Managerial economics extracts from microeconomic theory those concepts and techniques that enable managers to select strategic direction, to allocate efficiently the resources available and to respond effectively to tactical issues. What does managerial economics provide? A systematic and logical way of analysing business decisions which focuses on economic forces that shape both day-to-day short time decision and long run planning. The focus of microeconomics is at the firm or the market level. In managerial economics the focus is on the managerial behaviour. What does Managerial Economics provide? The Objective of managerial economics is to help business students become architects of business strategies. Managerial economics bridges the gap the cap between theorists and managers. Microeconomics and macroeconomics are largely descriptive, they describe how the economy works, not indicating how it should work. Managerial economics is largely prescriptive. It establishes rules and techniques to fulfill specified goals. For example, microeconomics tells you how a manufacturer prices their products; managerial economics tells him how he should price
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This note was uploaded on 09/24/2011 for the course MGCR 2049 taught by Professor Edwardbierbrier during the Spring '10 term at McGill.

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Chapter 1 - Chapter 1: Introduction to Managerial...

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