4 To explain the relationship between managerial economics, economic theory
and the decision sciences.
5 To explain how managerial economics is related to other disciplines in
business, such as marketing and finance.
6 To identify the main subject areas in managerial economics, explain how
they are related to each other, and describe how they are organized and
presented in the text.
7 To explain the methods used in the development of scientific theories and
show their relevance to managerial economics.
8 To explain how economic theory is presented from a pedagogical viewpoint,
and how this relates to the organization and presentation of the material in
the text.
1.1 Introduction
What is managerial economics about? What kind of issues does it deal with?
How can it help us make better decisions, in business or elsewhere? These are
fundamental questions which any student may ask when first approaching the
subject. It is therefore a good idea to make a start by examining a situation that
has become increasingly high on the economic and political agenda on a global
basis over many years; yet it is not a situation where it might seem at first sight
that managerial economics is particularly relevant. We shall see, to the contrary,
that the methods studied and implemented in managerial economics are
vital to identifying solutions to the problems raised.