Managerial Economics Definition |

Check out this managerial economics definition covering its importance and models including regression analysis, risk analysis and more.

Definition of Managerial Economics

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 because it is used in making business decisions such as the product to manufactured, the volume of goods that should be produced, the most ideal production method, the way the products should be distributed and marketed. 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 are used in in this branch of economics. For example, regression analysis is used to determine the effect of a change, for instance, effect of price change on demand. Production functions are used 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.