Economics is "the study of the behavior of human beings in producing, distributing and consuming material goods and services in a world of scarce resources."management is the discipline of organizing and allocating a firm's scarce resources to achieve its desired objectives.These two definitions clearly point to the relationship between economics and managerial decision making. In fact,we can combine these two terms and define managerial economics as the use of economic analysis to make business decisions involving the best use of an organization's scarce resources.