Managerial Economics and Micro Economics
Managerial Economics is basically a blend of Economics and Management. Two branches of economics i.e. micro economics and macro economics are the major contributors to managerial economics.
Micro Economics is the study of the behaviour of individual consumers and firms whereas microeconomics is the study of economy as a whole.
Managerial Economics and Micro Economics
All the firms operating in the market have to take under consideration the constituent of the economic environment for its proper functioning. This economic environment is nothing but the Micro economics elements.
Micro Economics is a broader concept as compare to Managerial Economics. Micro Economics forms the foundation of managerial economics. Almost all the concepts of Managerial Economics are the perceptions of Micro Economics concepts.
Managerial economics can be perceived as an applied Micro Economics. Demand Analysis and Forecasting, Theory of Price, Theory of Revenue and Cost, Theory of Supply and Production are major bare bones of Micro Economics that underpins the Managerial Economics. Managerial Economics applies the theories of Micro Economics to resolve the issues of the organization and for decision making.
All Managers want to carry out their function of decision making with maximum efficiency. Their business planning can be effectively planned and performed with comprehensive knowledge and understanding of micro economic concept and its applications.
Optimum decision making to achieve the objective of the organisation i.e. for profit maximizing or for cost minimizing, is possible with proper compliance of micro economic know how, regardless of the technological constraints and given market conditions. Micro Economic Analysis is important as it is applied to day to day dilemma and concerns.
The reliance of Managerial Economics on Micro Economics is made clearer in the points below:
Related Articles
- Managerial Economics - Introduction
- Scope of Managerial Economics
- Nature of Managerial Economics
- Principles of Managerial Economics
- Role of a Managerial Economist

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