Economics vs Managerial Economics: 9 Key Differences


9 Major Differences Between Economics & Managerial Economics

Economics is all about the study of scarcity. Primarily a social science, the subject explores the implications of the supply & demand cycle in the market and uses various analytical tools & techniques to explore, understand & ascertain observed economic phenomena in the real world. Economics is more than just numbers; it overlaps with other fields such as political science, mathematics, sociology, business, and many more.


Given its ubiquitous & expansive nature, economics has a lot of sub-divisions. For example, managerial economics is a significant sub-branch that amalgamates economic theory with administrative & decision-making practices.

There are stark differences between economics & managerial economics. This article explores 9 key differences between the two.

Economics vs Managerial Economics

Let’s get one thing straight.
Every aspect of our society, from production, employment & trade to banking, finance, policies, law, & taxation, is integral to its economy. Economics tries to understand & ascertain how all these aspects influence, affect, and change the economy & in turn, affect themselves. The subject is intricate & extensive, compelling many to seek professional economics homework help or Economic assignments Help.

Managerial economics derives heavily from economics. It employs the ideas and concepts from economic theory to enable informed & intelligent decision making. To understand the differences between economic & managerial economics, we first need to understand the nature & scope of managerial economics.

Understanding Managerial Economics

A key implicit goal of managerial economics is lessening the gap between economics in theory and economics in practice. It allows a business to effectively use scarce resources and guides managers in making informed decisions regarding varied aspects of the firm. Statistical & analytical tools and economic theory are used in tandem in solving real-life economic & business problems.

The benefits of managerial economics to a business are potent and prominent. So, if an economic theory is central to managerial economics, how can we differentiate between economics & managerial economics effectively?

Well, it isn’t easy. The 9 differences explored below arise primarily from the applicational aspects of the two domains. So now, let’s look at 9 key differences between economics & managerial economics.

9 Main Differences Between Economics & Managerial Economics

ü Economics can be broadly classified into microeconomics and macroeconomics. While macroeconomy studies the behaviour of an economy at large, microeconomics dwells on the study of decisions made regarding allocation of resources, prices of supplies, maintaining inventory, and the like.

Managerial economics utilizes components from microeconomics. Decision-makers used microeconomic theory to micromanage company resources and maintain the organization’s internal environment. The profitability and long-term functioning of the business are their endgames.

ü Managerial economics is primarily normative, while traditional economics, by definition, is much more positive. Positive economics uncovers and states an economic issue. Normative economics investigates the solutions to such matters.

Given that managerial economics is primarily goal-oriented & aims for resolutions, its normative nature is evident. On the other hand, traditional economics studies and researches broader issues in a society or economy.

ü By now, this particular difference may already be evident.

Managerial economics has a goal & task-oriented approach. The company’s short-term & long-term objectives are the focus area of managerial economics, helping managers formulate plans and strategies. Its focus is on the undisrupted operations and profitability of a business.

Traditional economics looks to understand & predict the economic phenomenon at large. However, unlike its managerial counterpart, economics is theoretical & research-based.

ü Traditionally, economics focuses upon the economic principles that purview policies, finance, a country’s growth, import & export, resource reserves, etc.

The scope and focus of managerial economics are much more limited & narrower. It aims to enhance operations and boost profitability by developing effective supply chain & procurement strategies, manufacturing methods, deals & partnerships, acquisitions & investments, etc.

ü Enabling sound decision-making is a direct goal of managerial economics. Decision making is not an immediate goal of traditional economics; however, models and research findings allow economists to guide policymakers to make better decisions.

ü Optimal resource planning & allocation and effective administration become possible with intuitive & efficacious application of managerial economic principles. Administrators use economic theory tools and mathematical methods (primarily microeconomics) to resolve business problems. With time, concepts from disciplines such as organization & strategic management have been incorporated into the subject, aligning it more with business administration.

Economists and economics observe how a society sustains itself using scarce resources. The subject studies how we humans develop commodities and how a pattern of supply & demand controls our society.

ü Studying human behavior is a primary concern in economics. Buying & spending behavior, societal divide, unemployment patterns, etc., influence our thoughts & actions and, eventually, the entire economy.

Investigating human behavior is not a major area of concern for managerial economics. Instead, its key concern is the company’s profitability and what decisions & strategies can increase returns & profits.

ü Managerial economics inadvertently deals with both the economic & non-economic aspects. For example, human resource policies, technological factors, laws & regulations, cultural values, etc.—all affect managerial decision making and the economic theories that make the more profound.

While traditional economics does investigate the influence of non-economic factors on economic growth, its focus is relatively less than that of its managerial counterpart.
ü Unlike traditional economics, managerial economics is still a developing field. Its exact scope is not set in stone and generally involves the following administrative aspects:

  • Strategic Management
  • Profit Management
  • Demand Analysis and Forecasting
  • Cost and Production Analysis
  • Pricing Decisions, Policies, and Practices
  • Capital Management

Key Takeaway:

The domains of economics and managerial economics overlap heavily. Managerial economics is all about using the tools, methods, and concepts in economics & economic theory for better business management & improved decision making.

Managerial economics redesigns theoretical ideas for successful implementation in the practical world. All in all, it can be said that if economics looks to make the world & society better, managerial economics aims to elevate the profitability & reputation of a company.

And that finally wraps up this write-up. Hope it was an informative read for one and all. If economics or managerial economics assignments & homework seems too demanding, do seek assistance from reputed homework helpers.


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