These factors lie within the scope and operations of a firm such as : 1. A managerial economist can serve the management best by recognising that the main objective of the business, is to make a profit on its invested capital. The life of a manager is filled with making decisions alter decisions. When demand is estimated, the manager does not stop at the stage of assessing the current demand but estimates future demand as well. The factors of production otherwise called inputs, may be combined in a particular way to yield the maximum output. He needs to systematically examine the chances of remodeling associate changing economic setting into profitable business avenues. This is the main argument for the adoption of historical method in the present day managerial economics.
Economic theory is based on certain assumptions. He should also undertake investment appraisal, project evaluation and feasibility study. In real business situation, there is seldom an investment which does not involve uncertainties. Much of the economic theory is based on the assumption of single goal-maximisation of utility for the individual or maximisation of profit for the firm. Is there any special emphasis for industrial promotion? It is, therefore, absolutely essential that a managerial economist recognises his responsibility to make successful forecast. Decisional roles: It involves decision making. It also goes deeper into such aspects as motives of holding inventory, cost of holding inventory, inventory control, and main methods of inventory control and management.
Which is useful for immediate guidance like production fees, import duties, export duties, and other tax rates. The specific functions of managerial economists are given below- i Capital projects ii Sales forecasting iii Analysis of underdeveloped economies iv Economic analysis of competing companies v Industrial market research vi Pricing problems of industry vii Economic analysis of agriculture viii Production programmers ix Environmental forecasting x Advice on foreign exchange. Certain important relevant questions in this connection are as follows: 1. Not only this, the firm will not have its superiority either. It can be used by firms for planning, co-ordination and mobilisation of resources. The theory of games holds out the hope of solving certain problems concerning oligopolistic interminacy.
The kind of economic policies pursued by the government constitute a powerful dement of the business environment of a firm. It refers mostly to what ought to be and cannot be neutral about the ends. In the entire process of management and in each of the management activities such as planning, organising, leading and controlling, decision making is always essential. Thus micro-economics gives a microscopic view of the economy. The buying of goods, sale of goods, payment of cash, receipt of cash and similar dealings are called business transactions.
The Australian government is based on the British system, which is the Westminster system of parliament, and consists of the House of Representatives … the Lower House and the Senate the Upper House. He must have the clarity of goals, use all the information he can get, weigh pros and cons and make fast decisions. It also makes use of well known models in price theory such as the model for monopoly price, the kinked demand theory and the model of price discrimination. They ha'1e to constantly measure the possibilities of translating the rapidly changing economic scenario into workable business opportunities. The aim of statistical method is to facilitate comparison, study relationships between the two phenomena and to interpret the complicated data for the purpose of analysis. If it is high, capital is unproductively tied up. Economic Theory and Managerial Theory 4.
In appraising a company, we must first understand how profit arises. Non-managerial employees are placed into categories according to their job functions. Hence managerial economics is economics applied in decision making. Thus, managerial economists help the management a lot in discharging its function of making decisions and formulating forward plans. So that the management can make the desired adjustments in future plans and policy decisions according to changing circumstances.
Analysis of External Factors Business firm decisions do not affect the internal Factors only. Production analysis frequently proceeds in physical terms. Is competition likely to increase or decrease with reference to the materials produced by the company? It is for the managerial economist that he makes his services essential and most sought after, both with the help of his ability, training and experience as well as due to his capacity to win continuing support for himself and his professional ideas. Managerial economics has its roots in economic theory. . Contacting the source of economic information and experts a managerialeconomist is responsible for providing all the relevant economic information to themanagement so the plans of the organization be chalked out after taking intoconsideration.
The second type of managerial role assumed by the overseers is the interpersonal relations. The overall role of managerial economics is to increase the efficiency of decision making in businesses to increase profit. A model is an abstraction from reality. We are trained in doing simulation studies. In the case of industries prone to rapid theological advances, the manager may have to make continuous assessment of tl1e impact of changing technology.
Expenses are met and incomes derived. It is a useful tool for the managerial economist for reducing transportation costs and allocating purchase amongst different supplies and site depots. Particularly, technical roles assumed by an administrator deals with specialized knowledge, procedures, and techniques to accomplish the task. The Governor-General is also Commander-in-Chief of the Australian Defence Force. Relation to Other Branches of Knowledge: A useful method of throwing light on the nature and scope of managerial economics is to examine its relationship with other disciplines. Input-output analysis is a technique for analysing inter-industry relation. The ten roles are divided into three categories: interpersonal , informational , and decisional.
A company without a properly laid out economic plan can never thrive in a market and thus the job of a managerial economists is of paramount importance. To discharge his role successfully, he must recognise his responsibilities and obligations. In advanced countries, big firms employ managerial economists to assist the management. In this order not only to work in the atmosphere of mental peace and its skill comes. In fine, managerial economics is a branch of normative economics that draws from descriptive economics and from well established deductive patterns of logic. It involves good forecast, organizing, coordinating, supervising and controlling techniques.