Application of Managerial Economics in Decision Making

7900 Words May 4th, 2010 32 Pages
1.0 Introduction 7
1.1 Definition of managerial economics 7
1.2 Choice and opportunity cost 9
2.0 Basic concerns of economics 9
3.0.0 Theories of economics 12
3.1.0 The theory of demand 13
3.1.1 Tastes 14
3.1.2 Number of buyers 14
3.1.3 Income 14
3.1.5 Expectations 15
3.2 The theory of supply 16
3.3 The theory of production 16
3.4 The theory of price( in government) 17
3.5 The theory of consumer behaviour 17
3.5.1 Rational behaviour 17
3.5.2 Preferences 17
3.5.3 Budget constraint 18
3.5.4 Prices 18
4.0 Managerial Economics and Economic Theories 18
5.0 General overview of the office of the Attorney General 19
6.0 Decision-making centres under the Office of the Attorney General 20
6.1 Decisions in the Office of the Attorney General: 21
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The definitions above are based on the fact that the resources of any society consists not only of the free gifts of nature, such as land, forests and minerals, but also of human capacity, both mental and physical, and of all man-made aids such as tools, machinery and buildings. It is sometimes useful to divide those resources into three main groups: (1) all those free gift of nature, such as land, forests, minerals,etc.,commonly called natural resources and known to economists as LAND; (2) all human resources, mental and physical, both inherited and acquired, which economists call LABOUR; and (3) all those man-made aids to further production, such as tools, machinery, plant and equipment, including everything man-made which is not consumed for its own sake but is used in the process of making other goods and services which economists call CAPITAL. These resources are called FACTORS OF PRODUCTION because they are used in the process of production. Often a fourth factor, ENTERPRENEURSHIP is distinguished. The entrepreneur is the one who takes risk by introducing both new products and new ways of making products. He organises the other factors of production and directs them along new lines.
The things that are produced by the factors of production are called COMMODITIES. Commodities may be divided into goods and services: goods are tangible, as