IGCSE Economics Paper-2: Specimen Questions with Answers 23 - 24 of 100

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Passage

Managerial Economics deals with practical business-problems relating to production, pricing, and sales.

Question 23 (2 of 5 Based on Passage)

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Short Answer▾

State the role of managerial economics in decision making.

Explanation

The role of managerial economics is as follows:

  • Managerial economics is an evolutionary science; it is a journey with continuing understanding and application of economic knowledge- theories, models, concepts, and categories emerging in business.
  • Decision making is the curricular aspect of dealing with business problems. Decision becomes essential since business problem would usually imply basic question: What is the alternative course of action?
  • For making an optimum economic choice as an aid to better decision making. It provides an understanding of the framework and economic tools needed by managers/businessman in business decision making.
  • It seeks to establish rules and principles to facilitate the attainment of desired economic goals of management.
The Basic Business Problems

Question 24 (3 of 5 Based on Passage)

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What do you mean by managerial economics?

Explanation

Managerial Economics is Pragmatic

  • It is scrutinizing the tools and techniques of economics which are helpful in decision making for a business. However, managerial economics is, not a part of economic theory. It is a separate discipline, involved in selection of economic principles and methods.
  • The business people require knowledge about economics to prosper. A business manager must have the knowledge about the fundamental concepts of economics and theories for a detailed analysis of business situations. Economics studies division making in view of many wants against scarcity means. Relates to managerial decision-making in achieving a business goal by using the given business resources in the most effective manner.
  • Managerial economics is confined only to a part of business management. It is primarily addressed to the analysis of economizing aspects of business problems and decision making by a business firm or an organization. It is not directly concerned with managerial problems and actions involving implementation, control, conflict resolution, and other management strategies in day to day operations of the business.

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