This document discusses key principles of managerial economics. It explains that managerial economics applies microeconomic analysis to business decision making. It outlines several principles that guide economic decisions including: 1) the opportunity cost principle which states decisions should maximize total rewards, 2) the marginal principle which says decisions should increase profits by raising total revenue more than total costs or lowering costs more than revenue declines, and 3) the equi-marginal principle which argues resources should be allocated so the ratio of marginal returns to marginal costs is equal across uses.