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CHARACTERISTICS AND SCOPE OF MANAGERIAL ECONOMICS

The following are the main characteristics of managerial economics-

1. Managerial Decision: Managerial economics is an applied subject,which helps in managerial decision to formulate business policies.It helps in decision-making to maximize output with minimum cost.

2. Based on Micro Economics: The nature of managerial economics is micro economic. It deals with the problem of a particular firm and its activities.

3. Macro Economics Based: Macro economics is also important andusefulinmanagerial economics. The study of macro economics enables the producer to adjust his business into the best possible environment with the outside forces like monetary, fiscal, industrial and labour policy.

4. Applied Nature of Economic Theory: In economic theory different laws areformulated but the applied part of economics is used in managerial economics. Thenature of managerial economics is applied, not theoretical.

5. Problems and Solutions: Managerial economics helps in studying the complicated and different types of problems related to business and suggests policy implications,so that the problems are easilysolved.

6. Economics of a Firm: The aim of a firm is to get maximum profit, whichisonly possible by effective policy and decision-making to minimize the cost of production.

7. Coordinating Nature: Managerial economics coordinates between the theoretical and practical aspects of running a firm. It uses micro as well as macro models.

8. NormativeScience: We study the theoretical aspects of the different laws of economics. We do not study whether these theories are good or bad. In managerial economics, we study what ought to be, along with the good or bad effects of the operation of economic laws.