After studying this lesson you will be able to distinguish managerial economics with its related subjects. Managerial economic is not something which is related to economics only, but there are other areas also to which managerial economic is related. Other related subjects of managerial economics are:
• Economics
• Mathematics
• Statistics
• Accounting
• Operation Research
• Computers
• Management
Before knowing the relationship between managerial economics and other related fields it is customary to divide economics into “positive” and “normative” economics. Economists make a distinction between positive and normative that closely parallels popper’s line of demarcation.
Positive economics:
It deals with description and explanation of economic behavior, Economics and Managerial economics. Managerial economics draws on positive economics by utilizing the relevant theories as a basis for prescribing choices. A positive statement is a statement about what is and which contains no indication of
approval or disapproval. It’s not like that positive statement is always right, positive statement can be wrong. Positive statement is a statement about what exists.
Normative economics:
It is concerned with prescription or what ought to be done. In normative economics, it is inevitable that value judgment are made as to what should and what should not be done. Managerial economics is a part of normative economics as its focus is more on prescribing choice and action and less on explaining what has happened.
It expresses a judgment about whether a situation is desirable or undesirable.
The primary task of Managerial economics is to fit relevant data to this framework of logical analysis so as to reach valid conclusion as a basis for action.
Another branch of economics which is normative like managerial is public policies analysis which is concerned with the problems of managing the government of a country.
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