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MANAGERIAL ECONOMICS – DEFINITION Managerial economics is a science that deals with the application of various economic theories, principles, concepts and techniques to business management in order to solve business and management problems. It deals with the practical application of economic theory and methodology to decision-making problems faced by private, public and non-profit making organizations. The same idea has been expressed by Spencer and Seigelman in the following words. “Managerial Economics is the integration of economic theory with business practice for the purpose of facilitating decision making and forward planning by the management”. According to Mc Nair and Meriam, “Managerial economics is the use of economic modes of thought to analyze business situation”. Brighman and Pappas define managerial economics as,” the application of economic theory and methodology to business administration practice”. Joel dean is of the opinion that use of economic analysis in

Meaning of Demand Conceptually, the term ‘demand’ implies a ‘desire for a commodity backed by the ability and willingness to pay for it.’ The desire without adequate purchasing power and willingness to pay, do not affect the market, nor do they generate production activity. A want with three attributes – desire to buy, willingness to pay and ability to pay – become effecting demand. For example – if a man wants to buy a car but he does not have sufficient money to pay for it, his want is not his demand for the car.  If a rich miserly person wants to buy a car, but he is not willing to pay for it, his desire too is his demand for a car. But if a man has sufficient money and is willing to pay the price of the car, his desire to buy a car is an effective demand. The term demand for a commodity always has a reference to ‘A Price’, ‘A Period of Time’, and ‘A Place’. Any statement regarding the demand for a commodity without reference to its price, time unit and place of demand is m