Determine the Managerial economics techniques
Though the most frequent applications of these techniques are as below:
- Risk analysis: Numerous models are used to quantify risk and asymmetric information and to use them in decision rules to manage risk.
- Production analysis: Microeconomic techniques are employed to analyse production efficiency, economies of scale, costs andoptimum factor allocation. They are also used to estimate the firm's cost function.
- Pricing analysis: Microeconomic techniques are used to examine numerous pricing decisions. This includes transfer pricing, price discrimination, joint product pricing, price elasticity estimations and choice of the optimal pricing method.
- Capital budgeting: Investment theory is employed to scrutinise a firm's capital purchasing decisions.