1. In a market economy, the price system facilitates allocation of resources. Discuss how a manager...

Question

1. In a market economy, the price system facilitates allocation of resources. Discuss how a manager may contribute to the profit maximization goal of a firm by studying managerial economics.
2. Discuss the typical risks faced by a firm.

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David · Accepted Answer

1.  In a market economy, the price system facilitates allocation of resources. Discuss how a 
manager may contribute to the profit maximization goal of a firm by studying managerial 
economics. 
Answer: 
Managerial economics helps in understanding problems related to cost, production, technology 
and distribution. The most important aspect of managerial economics is marginal analysis. 
Marginal analysis is an important technique used in decision making. It allows decision making 
at margin and thereby helps in determining optimal level of task. It compares marginal benefit of 
a task with its marginal cost and thereby helps the individual to make a right decision. If 
marginal benefit associated a task exceeds its marginal cost, then as per this analysis, the task 
must be undertaken because it generates benefit more than cost. Conversely,

1. In a market economy, the price system facilitates allocation of resources. Discuss how a manager may contribute to the profit maximization goal of a firm by studying managerial economics. 2....

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