Managerial Economics – Importance and Models

Check out the managerial economics importance and models including regression analysis, risk analysis that you should know.

The Managerial Economics Definition

In a nutshell, this branch of economics explores how the business can minimize input while maximizing output. It is an applied microeconomics that focuses on the field of economics that is very important to the managers. It includes production, demand, pricing, cost, market structure and government regulations.


This type of economics is important for several reasons. These include the making of business decisions such as the choices of product manufacture, the volume of goods for production, the most ideal production method, the way the products for distribution and marketing. In addition, it is very important because it enables businesses to make the best use of available resources by cutting down production costs while maximizing the output. Resources could be material or employees.

Models of managerial economics

There are various models that people use in this branch of economics. For example, regression analysis to determine the effect of a change, for instance, effect of price change on demand. Production functions to determine the optimum level of production that the company will gain maximum profit, while risk analysis evaluates the shortcomings that the company may face in the realm of business.

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