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Managerial Economics at the University: A Case Study in Normative Aspects

   

Added on  2020-04-15

12 Pages2829 Words206 Views
Running head: MANAGERIAL ECONOMICS Managerial EconomicsName of the StudentName of the UniversityAuthor Note

1MANAGERIAL ECONOMICS Table of ContentsIntroduction......................................................................................................................................2Managerial Economics: Unique Aspect..........................................................................................3Normative Aspect of Managerial Economics..................................................................................3Positive Economics versus Normative Economics......................................................................3Normative Aspects of Managerial Economics: Relevance to Reality.............................................4Explanation of the Normative Aspects of Managerial Economics..................................................6Demand Analysis and Forecasting..............................................................................................6Production and Cost Analysis......................................................................................................7Pricing Policies and Decisions.....................................................................................................8Profit Management......................................................................................................................8Conclusion.......................................................................................................................................9References......................................................................................................................................10

2MANAGERIAL ECONOMICS Introduction Economics, as a subject, deals with the aspects of scarcity of resources, efficientallocation of resources, production and monetary and fiscal dynamics in a region. However, overthe years the scopes of economics have expanded significantly and in the contemporary periodsthis stream of study has expanded with its venture and cognition with different fields. One ofsuch comparatively new aspects of economics, which have been gaining immense importance inthe recent years is that of the branch of Managerial Economics (Hirschey, 2016). The term, “Managerial Economics”, in a broad perspective, is the branch of economics,more specifically microeconomics, which deals with the application and real life implementationof the traditional and existing core economic concepts and analysis in the corporate and businessactivities, to help in formulation of managerial decisions (Png, 2013). In simpler words, thesubject bridges the gap between the theoretical framework of economics and their feasibility inthe real life scenarios, emphasizing specifically on the managerial aspects of the business world.This holds immense relevance in the contemporary period with the business environmentbecoming more integrated, competitive and globally inclusive (Zott & Amit, 2013). There are several unique aspects, which are very subjective to this field of ManagerialEconomics and which makes it different from that of the conventional economic frameworks.The report tries to discuss one such unique aspect of Managerial Economics, emphasizing ontheir requirement and importance in the real case scenarios in the contemporary global businessand economic framework.

3MANAGERIAL ECONOMICS Managerial Economics: Unique Aspect As discussed in the above section, the branch of “Managerial Economics”, have both thecomponent of theory as well as practicality (the theoretical part consisting of traditionaleconomic theories and the practical aspect constituting of the business scenarios in the realworld). This branch of cognitive economics has several unique features, which make this branchdifferent from conventional economics and relevant in the business and management domainstoo (Froeb et al., 2015). Normative Aspect of Managerial Economics Managerial Economics, as a subject, falls majorly under the domain of normativeeconomics than that of the positive economics. To understand this feature of managerialeconomics, it is of considerable importance differentiate between these two forms of economics,positive and normative, which are discussed in the following section (Stilwell, 2014). Positive Economics versus Normative Economics Positive Economics- This branch of economics is mainly concerned with the description ofdifferent economic phenomenon, with reference to the economic theoretical and conceptualframeworks, which exist. This implies that the positive branch of economics mainly focuses onthe behavioral and the cause and effect relationships between the different economic variablesand incidents and also includes the test of the economic theories (Hands, 2012). In other words,positive economics tries to show “what happens and why it is happening” in the economicperspective. However, this branch of economics is only descriptive and not prescriptive, whichimplies that the positive economics does not try to analyze whether statements and phenomena

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