Why Microeconomics Analysis is Important for Managers?

Managerial economics is a microeconomics analysis for practical application of the models and tools. That’s why the managers need to learn not only fundamental but also the latest developments in microeconomics to make their business decisions on economic reasoning.

It may be intimidating to the traditional managers.

But it is not only exciting but also crucial for their day to day affairs. I could not have realized it until I got a chance to learn economic reasoning from Prof. Mukul Asher of LKY School of Public Policy, National University of Singapore. The idea was solidified when Prof. Charles Adams, former Assistant Director, IMF for Asia, quoted another economist say that if you want to be a good manager, you need to be a good economist.

It was not only terrifying but also near to impossible to be a good economist after spending 22 years in traditional administration and avoiding microeconomics analysis like the plague. Later I learned from Prof. Ricardo Hausmann that even if I study economics for a decade the best answer to any economics question would be:

 “It Depends!”

Microeconomics Analysis and Changing Market Condition

Whatever managerial slot you are enjoying, basic microeconomics models introduce you to the methods to understand business world working around you. The modern developments and theories lead you to direct application of the concepts in the real world.

But there is a catch …!

Don’t take every lesson in your microeconomics analysis as an absolute law.

In fact, we take every model assuming specific environment and market conditions while in real life the market forces are neither laws nor mathematical formulas to give us the same result in every market condition. In a classroom, we analyze markets according to a tendency, but it is not absolute. For example, we take markets as fully competitive, without any monopoly, having no barriers for capital to enter or exit and consumers as having every information equal to all without spending extra dollars or hours to know, etc. We also assume producers are transferring price of their inputs accurately to their end products as their costs.

In real life, it is not like that.

Can you imagine a market which is fully competitive, no product differentiation and no barriers for exit or entry of capital in the market?

Such ideal conditions don’t exist anywhere in the world.

How can this website help the managers?

I know it is a long journey…

… the distance gets longer due to my slow speed updating the website.

But I have launched this website by keeping in mind my experience, my basic knowledge, and applications of the theories in the name of managerial economics. I also try to keep myself updated on the latest developments in the field. I also get services from other experts to share their knowledge with my visitors. Best of the all the valuable visitors share their experiences and knowledge for others to discuss.

If you stick around, you can find the microeconomics models and concepts unfolding themselves slowly. You can subscribe to the RSS feeds to know the latest updates on this website. The microeconomics analysis provides tools and themes to help you to take managerial decisions with economic reasoning around the theories.

I shall share different tools, management related issues and the latest developments in the microeconomics to help you apply it to your day to day work and understand how managerial decisions are made in the real world.