1. What is Managerial Economics?
Solution
Study of economic theories, logic and methodology for solving the practicalproblems of
business. It is used to analyze business problems for rational businessdecisions. It is also called
as Business Economics or Economics for firms.Relevance to engineers/Managers:Engineering
and Management involves a lot of strategic decision making situations.Managerial economics
helps in rational decision making. The various economic conceptshelp a manger to take right
decisions. The scope of managerial economics is:
I.The selection of the production or the service to be produced.
II.The choice of production methods and resource combinations
III.The choice of best price and quantity combinations
IV. Promotional strategy and activities.
V. The selection of location from which to produce.