State the characteristics of managerial economics, Managerial Economics

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1. Uses theory of firm: Managerial economics uses economic principles and conceptsthat are known as theory of Firm or 'Economics of the Firm'. So its scope is narrower than that of pure economic theory.

2.  Takes the help of macroeconomics: Managerial economics incorporates certain aspects of macroeconomic theory. These are vital to comprehending the circumstances and environments which envelop the working conditions of an individual firm or an industry. Knowledge of macroeconomic issues liketaxation policies, business cycles, industrial policy of the government, price andwage policies, distribution policies and anti-monopoly policies and so on, is integral to successful functioning of a business enterprise.

3. Objectives at helping the management: Managerial economics aims at supporting management in taking corrective decisions and charting plans as well as policies for future.

4. A scientific art: Science is a system of principles and rules engendered for attaining given ends. Scientific methods have been credited as optimal path to achieving one's goals. Managerial economics has been is also known as a scientific art since it helps the management in the efficient and best utilisation of scarce economic resources. It considers production costs, price, demand, risk, profit etc. It helps the management in singling out the most feasible alternative. Managerial economics facilitates result oriented and good decisions under conditions of uncertainty.

5.  Prescriptive instead of descriptive: Managerial economics is anapplied and normative discipline. It proposes the application of economic principles with regard to policy formulation, decision-making and future planning. It not only defines the goals of an organisation but also prescribes the means of   achieving these goals.



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