BUSN 6120 Managerial Economics

BUSN 6120 Managerial Economics


The Boeing Aircraft Company has dominated the commercial aircraft market for decades, but its position of influence has lessened in recent years.

Its chief competitor, Airbus, has made significant market gains, and may be posed to become the number one producer of commercial aircraft in the near future.

Use the material in Chapters 1-6(Managerial Economics 9th) to analyze how Boeing and Airbus approach the aircraft marketplace, how they are alike and different (particularly their production processes), where the rivalry is likely to head, and the most probable outcome of their ongoing competition.

Remember to document sources, to be specific, and to tie your ideas back to Managerial Economics.


Managerial Economics can be defined as amalgamation of economic theory with business practices so as to ease decision-making and future planning by management. Managerial Economics assists the managers of a firm in a rational solution of obstacles faced in the firm’s activities.

Study of Managerial Economics helps in enhancement of analytical skills, assists in rational configuration as well as solution of problems.

While microeconomics is the study of decisions made regarding the allocation of resources and prices of goods and services, macroeconomics is the field of economics that studies the behavior of the economy as a whole (i.e. entire industries and economies).

Managerial Economics applies micro-economic tools to make business decisions. It deals with a firm.

The use of Managerial Economics is not limited to profit-making firms and organizations.

But it can also be used to help in decision-making process of non-profit organizations (hospitals, educational institutions, etc). It enables optimum utilization of scarce resources in such organizations as well as helps in achieving the goals in most efficient manner.

Managerial Economics is of great help in price analysis, production analysis, capital budgeting, risk analysis and determination of demand.

Managerial economics uses both Economic theory as well as Econometrics for rational managerial decision making.

Econometrics is defined as use of statistical tools for assessing economic theories by empirically measuring relationship between economic variables. It uses factual data for solution of economic problems. Managerial Economics is associated with the economic theory which constitutes “Theory of Firm”.

Theory of firm states that the primary aim of the firm is to maximize wealth.

Decision making in managerial economics generally involves establishment of firm’s objectives, identification of problems involved in achievement of those objectives, development of various alternative solutions, selection of best alternative and finally implementation of the decision.

primary ways in which Managerial Economics correlates to managerial decision-making are shown using the figure below