The main difference between Economics and Managerial Economics is that economics deals with only the economic aspects of a problem whereas the latter, deal with economic as well as non-economic aspects of that problem for decision making. To understand its difference, first, we have to know the meaning of both terms:
Meaning of Economics :
Economics is a social science that studies how individuals, firms, governments, and nations manage to utilize the resources to fulfill their needs. It includes the whole process starting from the production of goods and services to its consumption including its distribution and transfer of wealth among economic agents.
In other words, economics is that branch of knowledge that is concerned with the consumption, production, and transfer of wealth. It helps the business to forecast or predict its demand and supply of goods in the future and it also helps the government get to know about the economic growth or employment in the country.
Meaning of Managerial Economics: –
Managerial Economics is the branch of Economics where the economic theories and business practices are integrated for the purpose of decision making and planning for the management. As it is applied economics in business, that is why is also known as Business economics.
Chart of Difference: –
| Basis of Difference | Economics | Managerial Economics |
|
Meaning |
It involves the framing of economic principles to solve economic problems. | It involves the application of economic principles to solve economic problems. |
|
Character |
It is microeconomic as well as macroeconomic in character. | It is microeconomic in character. |
|
Main Task |
In it, the fulfillment of the needs of individuals, as well as entities, is the main task. | It involves proper decision-making as its main task. |
|
Nature |
It is positive as well as normative in nature. | It is only normative in nature. |
|
Scope |
It has a wider scope. | It has a narrower scope as compared to the scope of Economics. |
|
Branches |
It involves managerial economics as its applied branch. | It is an applied branch of economics. |
|
Concerned with |
It is concerned with all the theories starting from production to consumption including distribution. | It is concerned with only profit theory and ignores other theories. |
|
Analysis Involved |
It includes the analysis of macro-level issues like growth, inflation, and employment, etc. | It includes the analysis of micro-level issues like demand, supply, and profit, etc. |
|
Concentration |
It concentrates only on the economic aspects of any business problem. | It concentrates on both economic as well as non-economic aspects of any business problem. |
|
Validity of Assumptions |
It is based on certain assumptions. | In it, some assumptions become invalid when applied. |
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Conclusion: –
Thus, Economics involves the study of the business problem and making economic principles on the basis of assumptions. Whereas, Business Economics involves solving the economic problem by implementing these principles. In other words, Economics is the more theoretical term when compared to the practical ability of both terms.
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