Definition and Scope of Managerial Economics
A. Definition


Managerial Economics: The application of economic theory and quantitative methods to
analyze business decisions. It bridges the gap between abstract economic theories and
practical business applications.
Key Concepts: Focus on microeconomic tools (demand, cost, pricing, and competition)
and how they influence business decisions.
B. Scope of Managerial Economics



Decision-Making Framework: Helps businesses make decisions regarding resource
allocation, production planning, pricing strategies, and risk management.
Analytical Tools: Utilizes tools like demand forecasting, cost-benefit analysis, and
market analysis to guide decision-making.
Relevance to Agribusiness: Tailors economic theories to the specific needs of
agricultural businesses, where decisions are influenced by factors such as seasonality,
weather conditions, and market volatility.
Discussion Points:


How does managerial economics differ from general economics?
Why is understanding economic principles crucial for business managers, particularly in
agribusiness?
Example:

A farm manager uses demand forecasting to decide how much of a particular crop to
plant, considering market demand, expected prices, and input costs.