Managerial Economics

Catalog description

Managerial economics instructs managers on the economic approach to management. This course stresses three areas of management decision making: allocative, controlling behavior, and profit analysis. Central to any organization's functioning is the allocation of resources to competing ends for the purpose of accomplishing a final goal. Managerial economics teaches the logic of this process using the classical optimization vocabulary of resource, constraint, competing ends, accounting prices, economic prices, final goal, and choice. Humans, being a highly social species with a high-level consciousness, want to describe, explain, control, and predict behavior. Any human organization, if it is to be successful, requires behavioral technologies to deal with its own members and outsiders. Managerial economics teaches the rational actor's approach to describing, explaining, controlling, and predicting behavior. Finally, the sine qua non of a capitalistic business is profit. Yet few managers appreciate the constellation of variables that determines it. Managerial economics employs a profit model that allows managers to see the connections among demand, resource prices, technology, quantities of fixed input, a product's price, a firm's capacity utilization rate, and profit. Emphasized throughout this course are reasoning and problem solving skills as opposed to memorization.