Ques.1 “Managerial Economics is the integration of economic theory with business practice for the purpose of facilitating decision – making and forward planning by manager”. Explain and comment.

                  Managerial economics is a science that deals with the application of various economic theories, principles, concepts and techniques to business management in order to solve business and management problems. It deals with the practical application of economic theory and methodology to decision-making problems faced by private, public and non-profit making organizations.

The same idea has been expressed by Spencer and Seigelman in the following words. “Managerial Economics is the integration of economic theory with business practice for the purpose of facilitating decision making and forward planning by the management” .According to Mc Nair and Meriam, “Managerial economics is the use of economic modes of thought to analyze business situation”. Brighman and Pappas define managerial economics as,” the application of economic theory and methodology to business administration practice”.Joel dean is of the opinion that use of economic analysis in formulating business and management policies is known as managerial economics.

Managerial economics is a highly specialized and new branch of economics developed in recent years. It highlights on practical application of principles and concepts of economics in to business decision making process in order to find out optimal solutions to managerial problems. It fills up the gap between abstract economic theory and managerial practice. It lies mid-way between economic theory and business practice and serves as a connecting link between the two.