Managerial economics is the study of how managers can apply economic principles and analyses as well as quantitative tools in making an effective business and managerial decisions involving the best use (allocation) of the organizations scarce resources to achieve their objectives. The theory of the firm was developed in the nineteenth century by French and English economists. It is in this part where a brief discussion on the relationship of economic theories and managerial economics is made, emphasis being made on the general decision-making process. The focus of accounting within the firm is fast changing from the concepts of store keeping to that if managerial decision making, this has resulted in a new specialized area of study called “Managerial Accounting”. Managerial economics is a branch of economics that applies micro economics in managerial decision making. This is very important because economic profits play a crucial role in a market based economy., Managerial economics is very much capable of serving various purposes and useful for managers in making decisions in relation to the internal environment. It focuses on the theory of the firm which considers profit maximization as the main objective. Managerial economics is competent enough for serving the purposes in decision making. Managerial Economics and Decision Making. Also it helps in optimize business decision with. A student of managerial economics should be familiar with the generation, interpretation and use of accounting data. It aims at the development of economic theory of the firm while facilitating the decision making … Most of the people are not aware of the existence of some businesses with fantastic economic characteristics like high rate of return on invested capital, substantial profit margins and consistent growth. One has to observe the economic prospects of a particular #industry before venturing into it. Managerial economics use various economic tools and techniques for decision making in business like regression analysis, correlation etc. Managerial economics is a management science that gives you more idea about the economic aspects of a market and how they affect your decision making.

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