Here, you will learn about the relationship of managerial economics with other disciplines. Also, we come to know the uses of managerial economics like the relationship of managerial economics with statistics, math, accounting, operation research and economics.
Relationship of Managerial Economics with Other Disciplines or Subjects
1. Managerial Economics and Statistics
Statistical tools are playing very important role in business decision-making. Statistical techniques are used in collecting, processing and analyzing data, testing the validity of the economic laws with the real economic phenomenon before they are applied to business analysis. Probable economic events are the basis of a good business decision. Various statistical tools Such as theory of probability, forecasting techniques etc., help the decision-makers in the prediction of future economic events.
2. Managerial Economics and Mathematics
The main challenge of a businessman is how to minimize cost or how to maximize profit or how to optimize sales. To find the answers of these questions, various mathematical concepts and techniques are widely used in economic logic. The knowledge of geometry, trigonometry and algebra is not only important but various mathematical tools and techniques such as logarithms and exponentials, vectors, matrix, calculus, differential and integral are also necessary for managerial economics.
3. Managerial Economics and Accounting
Various data are required by a managerial economist for the decision-making purpose. Accounting details are included in data. For example, the profit and loss statement of a firm gives details about the performance of the firm and guides the managerial economist to prepare the future course of action-whether it should improve or close down.
4. Managerial Economics and Operations Research
Models and tools of operations research or quantitative techniques are affecting the managerial economics. Operations research is a subject that consists of a number of models and analytical tools which are developed on the basis of inter-disciplinary research for solving complex problems of planning and allocation of scarce resources, primarily in defense industries.
Managerial economics has generalised and developed the models and tools of operations research for the purpose of business decision-making. Linear programming models, inventory models, game theory, etc. are a few tools that have originated in the works of operation researchers.
5. Managerial Economics and Theory of Decision-Making
Decision theory has been developed to deal with problems of choice or decision- making under uncertainty, where the applicability of figures required for the utility calculus are not available. Economic theory is based on the assumptions of a single goal whereas decision theory breaks new grounds by recognizing multiplicity of goals and persuasiveness of uncertainty in the real world of management.
6. Managerial Economics and Economics
Managerial economics has been described as economics applied to decision-making. Managerial economics has been studied as a special branch of economics, bridging the gap between pure economic theory and managerial practice. Economics has two main branches – microeconomics and macro-economics.
Major 6 Uses of Managerial Economics
Following are some important uses of managerial economics:
1. Used for Integration of Economic Theory
Economic theory and business practice is integrated with the help of managerial economics.
2. Used as Solution to Practical Business Problems
It acts as a mean to apply economic concepts and principles to solve practical business problems in real life. Managerial economics helps in employing the most modern instruments and tools to find solutions to business problems.
3. Optimum Use of Scarce Resources
It helps in making optimum use of scarce resources of a firm to maximize profits.
4. Used for Other Objectives
The various objectives such as attaining industry leadership, expansion of market share, etc., are achieved with the help of managerial economics.
5. Used for Overall Development
Managerial economics facilitates in making overall development of a firm.
6. Used in Making Right Decisions
A manager understands the details of business problems and taking a right decision at the right time with the help of managerial economics.
How is Economics related to other Subjects?
Economics is related to other subjects in a few ways. One way is that economics uses the scientific method to study human behavior. This means that economics is related to psychology and sociology. Another way is that economics uses math to model human behavior. This means that economics is related to math.
Why should you be aware of the Relationship of Economics to other Sciences and Disciplines?
Economics is related to other sciences and disciplines because it helps to explain how people use resources to satisfy their needs and wants. It also helps to understand how the economy works and how it affects people’s lives.
How useful is Managerial Economics to a Manager?
Managerial economics is a very useful tool for managers.
1. It helps managers to understand how to make decisions that will optimize their company’s resources and maximize profits.
2. Additionally, managerial economics can help managers to understand and predict consumer behavior, which is essential for effective marketing and sales strategies.