- Opportunity Cost: It represents the value of the next best alternative foregone when a decision is made. It also guides resource allocation decisions by considering the trade-offs between different options.
- Demand and Supply Analysis: It examines how consumers’ demand for goods and services interacts with their supply in the market. It also helps in pricing decisions, production planning, and inventory management.
- Elasticity of Demand and Supply: It measures the responsiveness of quantity demanded or supplied to changes in price, income, or other factors. It aids in pricing decisions, revenue optimization, and understanding market sensitivity.
- Managerial Decision-Making Models: These involve the use of mathematical and statistical models to analyze and solve business problems. They also provide a structured approach to decision-making, especially in complex situations.
- Behavioral Economics: It incorporates insights from psychology to understand how individuals and organizations make economic decisions. It also enhances understanding of decision-making processes and helps in designing effective incentives and policies.
- Game Theory: Game theory helps in the analysis of various strategic interactions among competing firms and individuals. It is also very useful in predicting and understanding the behavior of competitors in strategic decision-making.
Managerial Economics : Scope, Nature, and Importance