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Nature and scope of managerial economics play an important part in the management studies,
it helps manager and the business organizations to achieve their goals,
a study of managerial economics is one of the important subjects that should be covered while management studies.
First of all, we need to know what ECONOMICS is:
It is related to the wealth or we can say that it is related to the income of the individual,
in a simple business, the life that how he earns his income and how he spent it.
In another word, we can say that it is the study or the individual’s wealth
most importantly individuals business life study.
In other words, we can say that Economics is the study of production,
export or import of wealth and consumption.
Economics is a human science which is concerned with the production,
distribution and how the goods and services can be used, economics is differentiated in two parts which are
Microeconomics and Macroeconomics
Microeconomics is something which is concerned with the income or wealth of the individual whereas Macroeconomics is something which is concerned with the income and wealth of the group.
As the word suggests managerial it is clear that it is the main tool which helps the managers
to take the economic or financial decision
We can say that managerial economics is one of the branch of economics which deals
with the application, tools, methods or ways to deal with the real financial problem of the business,
it sometimes acts as a bridge between practical and theory of business it helps the managers in making
the business decision.
Managerial economics helps almost in every decision of business whether big or small
but mostly it is used to analyze the risk, production, pricing technique of the company
as well as the capital budgeting of the company.
As further in this article, you will also get to know the Nature and scope of managerial economics.
The concept and method of managerial economics helps in analyzing the risk and helps
the managers to apply that minimizing risk technique in the business.
The managerial economics help in making cost-effective production, optimum use of the production cost.
The technique helps in analyzing various price factors such as transfer of price, the different price of different products and discrimination of price.
It helps in analyzing the firm’s efficiency of capital purchasing decision it also helps in making the assessment of the invisible funds of the company.
The techniques of managerial economics help in making decisions regarding the sales promotion, promotion of the product also helps in choosing the area or sector where the firms can do good business.
Now let us discuss Nature and scope of managerial economics in detail.
SCOPES OF MANAGERIAL ECONOMICS:
1 DEMAND ANALYSIS AND FORECASTING:
Demand is something which shows the willingness the customers to buy the product the demand of the product only analyses the profit or loss the company even the salary of the employees is also based on the demand of the product, it identifies the size of the market that what type and what size of the market is captured by the company.
As we know a firm is an economic unit which transfers the productive resources into the goods which can be sold in the market so the firm should forecast exact demand of the product because every output is to be sold in the market for the profit of the firm, the demand forecasting also helps the management of the company to maintain their share in the market in between their rival or competitive companies .
2 COST AND PRODUCTION ANALYSIS:
The most important factor for any firm is the cost factor the wise manager of the company will always try to maintain or to minimize the cost factor of the company he will try to minimize the cost and maximize the output of the product he will make a list of the factors which are causing variation in the cost of the production he will try to solve them he will avoid the wastage of time, wastage of cost and the wastage of material.
3 PRICING DECISION:
The decision made regarding the pricing policy of the company he will always try to maintain the price of the product such that the production cost and profit could come out of that.
He will take the decision of the price of the product only after he studies the sector
in which the firm is operating that what kind of market and what size of the market
the firm is capturing this is the most important factor because the profit and loss of the company depend on this decision only.
4 PROFIT MANAGEMENT:
Profit is something which each and every manager wants to earn for his company.
it is the main reason why a business survive without profit no business can survive in the market.
We can say that profit is the reward for bearing risk and uncertainties of the business,
the successful manager will always find the way for making higher and higher profit,
therefore he will take the decision which will maximize the profit such as he will avoid wastage of the goods,
time, cost etc.
5 CAPITAL MANAGEMENT:
Thus here comes the main problem of the modern business manager that where the capital of the company should be invested so that it may lead to the profit of the firm.
Nowadays the investment is in the technical field such as which machinery will be more efficient but the same time the cost should be low, the infrastructure of the company and most importantly in which project in which sector the company should work to maximize their end goal which is profit.
NATURE OF MANAGERIAL ECONOMICS:
- Managers get help in making decisions and implementing the planning
- It helps in solving the practical business problems
- Helps in making profitable decisions and profitable use of resources to.
- It helps in taking the best decisions for the future depending on the past experiences.
CONCLUSION ON NATURE AND SCOPE OF MANAGERIAL ECONOMICS / MANAGERIAL ECONOMICS
Nature and scope of managerial economics / managerial economics is something which helps the manager to take the decision regarding the future of the company. it helps in making demand forecasting depending on the past experiences of the firm depending on the market size as well as the potential customer of the company which
will help in making a profit for the firm.
Managerial economics is the branch of economics which helps the manager to become successful by making higher profit for which he should avoid wastage of time, wastage of products or resources he had to minimize the cost of production he had to also take the decision regarding the cost or the price of the product he had to keep in my mind that the cost of the product should make profit for the firm
The manager had to also take the top level decisions regarding the infrastructure of the organization, the tools and machinery for the employees working in the company and most importantly in which area should the firm take projects which would lead to the last goal of the company that is profit. Nature and scope of managerial economics explain all the role that is to be played by a manager.