Managerial Economics

Management is responsible for making in-house decisions, and in many cases involves risks and uncertainties. All models were developed based on the company's goal to help determine the decisions that must be made to achieve the desired result (Moschandreas, 2000). The neoclassical model shows that the company's main goal is to maximize profits. But economists think that it is not realistic to assume the company's goal of getting the maximum profit in this modern economy for the reasons described below.

The close mutual relationship of business economics brought about the development of business economics. Economic analysis is necessary for various concepts such as demand, profit, cost, competition and so on. In this way, management economics is considered to be an alternative to economics applied to "selection problems" and corporate resources shortage. Microeconomics studies the behavior of individual consumers and businesses; management economics is application specialization of branch offices. Macroeconomics includes the performance, structure and behavior of the economy as a whole. Business economics applies microeconomic theory and technology to management decisions. Compared with microeconomics, the scope is more limited. Macroeconomists will study comprehensive indicators such as GDP and unemployment rate to understand the function of the entire economy.

To analyze the business environment, all economic theories, tools, and concepts are included in the scope of management economics. Because it is a developing science, the scope of management economics is an ongoing process. Demand analysis and forecasting, profit management, and capital management are also considered areas of controlled economics. Demand analysis and forecasting includes many decisions. Demand forecasting is an indispensable factor in decision making and future sales valuation will help to maximize profit by strengthening its position in the market. Demand analysis and prediction play a very important role in the management economics

In order for every company to truly gain competitive advantage, it is important to incorporate the economics of management into the decision-making process. Mr. Mark Hirschey and Mr. Eric Bentzen point out that business economics is about how economic power influences the organization and how leaders use economic principles to achieve optimal results I assert there is. From large enterprises to non-profit organizations across all economic disciplines, this concept is a very useful tool that helps leaders to make informed business decisions.