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    Difference between Traditional and Managerial Economics

    ADVERTISEMENTS: The upcoming discussion will help you to differentiate between traditional and managerial economics. Difference # Traditional Economics: 1. The Traditional Economics has both Micro and Macro aspects.    2. This is both positive (existing certain) and  Normative Science. 3. This deals with Theoretical aspects only.    ADVERTISEMENTS: 4. Here, problems are analysed both from Micro and […]

    Difference between Traditional and Managerial Economics

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    The upcoming discussion will help you to differentiate between traditional and managerial economics.

    Difference # Traditional Economics:

    1. The Traditional Economics has both Micro and Macro aspects.   

    2. This is both positive (existing certain) and  Normative Science.

    3. This deals with Theoretical aspects only.

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    4. Here, problems are analysed both from Micro and Macro point of view.

    5. It studies human behaviour on the basis of certain assumptions, but these assumptions do not hold good in Managerial Economics.

    6. Here, we study only the economic aspects of

    the problems.

    7. Here, we study principles underlying rent, wages, interest and profits.

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    8. Here, efficiency of the firm is not studied.

    9. Traditional Economics scope is wide and it  covers various areas.

    Difference # Managerial Economics:

    1. It is essentially Micro in character.

    2. This is essentially Normative (setting standard) in nature.

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    3. While it deals with Practical aspects.

    4. It studies the activities of an individual firm or unit.

    5. Managerial economics deals mainly with Practical problems.

    6. Here, both economic and non-economic aspects of the problems are studied.

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    7. Here, we study mainly the principles of profit only.

    8. Here, the most important task is to study how to improve the efficiency of the firm.

    9. While the scope of Managerial Economics is limited and its scope is not so wide as that of Traditional Economics.

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    Difference between Traditional and Managerial Economics

    The primary difference between Traditional Economics and Managerial Economics; First, the Traditional economy is an original economic system

    Home Difference Between Content Difference between Traditional and Managerial Economics

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    DIFFERENCE BETWEEN CONTENT

    Difference between Traditional and Managerial Economics

    by Nageshwar Das March 29, 2021 No comments 5 minute read

    The primary difference between Traditional Economics and Managerial Economics; First, the Traditional economy is an original economic system in which traditions, customs, and beliefs help shape the goods and services the economy produces and the rules and manner of their distribution. Countries that use this type of economic system are often rural and farm-based. The concept of the study explains – What is traditional economics? Meaning, and What is Managerial economics? and their difference.

    Understanding and Learn, Explain the Difference between Traditional Economics and Managerial Economics!

    Contents:

    1. Understanding and Learn, Explain the Difference between Traditional Economics and Managerial Economics!

    1.1. What is traditional economics? Meaning.

    1.2. What is managerial economics? Meaning.

    1.3. What is the Difference between Traditional Economics and Managerial Economics?

    1.3.1. The difference in Traditional Economics:

    1.3.2. The difference in Managerial Economics:

    1.4. Another Main difference between Traditional and Managerial in without table:

    1.5. What is the difference between economics and managerial economics? Some Explanation.

    Also known as a subsistence economy, a traditional economy defines by bartering and trading. A Little surplus produces, and if any excess goods are made, they are typically given to a ruling authority or landowner.

    After, Managerial economics is the “application of the economic concepts and economic analysis to the problems of formulating rational managerial decisions”. It sometimes refers to as business economics and is a branch of economics that applies microeconomic analysis to decision methods of businesses or other management units.

    What is traditional economics? Meaning.

    Traditional economics refers to the more primitive principles of modern economics, which are commonly using in undeveloped countries, who have not yet embraced technical and globalization changes in the study of economics over the years. Traditional economics relies on the use of old cultures, trends, and customs in allocating rare resources to gain profit.

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    A traditional economy will definitely rely on the traditions of heritage and how the previous generations have made their production activities, which will create the basis for the production of goods. The main production activities in the traditional economy include farming, livestock activities, and hunting. In countries with such traditional economic systems, Papua New Guinea, South America, parts of Africa, and the rural areas of Asia are including.

    What is managerial economics? Meaning.

    Managerial economics refers to the branch of economics, which derives from the subject matter of microeconomics, which considers houses and firms in the economy, and macroeconomics related to employment rates, interest rates, inflation rates, and other macroeconomic variables from the country are related to the complete completion.

    Managerial economics uses mathematics, statistics, management theory, economic data, and modeling techniques to help business managers manage their operations with maximum efficiency. They help managers make the right decisions in the allocation of rare resources such as land, labor, capital to achieve high profitability while reducing costs. Managerial economics helps managers decide which products to produce, how much to produce, what prices will determine, and what channels to use in sales and distribution.

    What is the Difference between Traditional Economics and Managerial Economics?

    The upcoming discussion will help you to differentiate between traditional and managerial economics.

    The difference in Traditional Economics:

    Traditional Economics has both Micro and Macro aspects.

    This is both positive (existing certain) and Normative Science.

    This deals with Theoretical aspects only.

    Here, problems are analyzing both from a Micro and Macro point of view.

    It studies human behavior based on certain assumptions, but these assumptions do not hold good in Managerial Economics.

    Here, we study only the economic aspects of the problems.

    Here, we study principles underlying rent, wages, interest, and profits.

    Traditional Economics scope is wide and it covers various areas.

    Here, the efficiency of the firm is not studying.

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    The difference in Managerial Economics:

    It is essentially Micro in character.

    This is essentially Normative (setting standard) in nature.

    While it deals with Practical aspects.

    It studies the activities of an individual firm or unit.

    Managerial economics deals mainly with Practical problems.

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    Relationship between Managerial and Traditional Economics

    Find the relationship between managerial and traditional economics. Interrelation and differences between managerial and traditional economics.

    Relationship between Managerial and Traditional Economics

    Leave a Comment / Managerial Economics, Study Materials / By Enotes World

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    Managerial economics is developed from microeconomic theories by taking those concepts and techniques that help managers to select strategic decisions/direction, efficiently allocate the available resources, and to respond effectively to strategic issues. Therefore, it is an application of economic theory into business practice/management. Managerial economics uses micro and macroeconomics, their concepts, theory, and techniques but they are mostly guided by microeconomics. It uses several econometric models also. All the microeconomic and macroeconomic concepts are of traditional economics. So there is a relationship between managerial and traditional economics.

    The concepts used by managerial economics such as marginal cost, marginal revenue, the elasticity of demand are microeconomic concepts and national income, money, investment, consumption, international trade, etc. are macroeconomic concepts and these all are originally the subject matter of traditional economics.

    Therefore, the relationship between managerial economics with traditional economics is like that of engineering with physics and medicine with biology. The relationship between managerial and traditional economics can be seen as interdependence and differences between them.

    Contents [hide]

    1 Interdependence between traditional and managerial economics

    1.1 In the field of production

    1.2 In the field of sales promotion

    1.3 In the field of financial decisions

    1.4 Business forecasting

    1.5 Decision making

    2 Traditional economics VS managerial economics

    Interdependence between traditional and managerial economics

    The interdependence between managerial and traditional economics can be seen in the following titles;

    In the field of production

    There is a close relationship between managerial economics and traditional economics in the field of production. There is a need for an efficient allocation of resources to get the optimal level of production by scarifying the minimum amount of input resources.

    For such the business managers should know economies of scale, the law of diminishing return, the optimal combination of inputs, etc. and these are the matters of traditional economics.

    In the field of sales promotion

    Demand for any commodity depends upon many factors like the income of the consumer, size of the population and its composition, advertisement, the elasticity of demand, consumer’s expectations, etc.

    These all are studied under traditional economics. But to promote the sales volume application is done by managerial economics

    In the field of financial decisions

    For rational investment decisions, managerial economies have to consider the concept of the time value of money which is the subject matter of traditional economics.

    By using concepts of traditional economics, managerial economics analyses the allocation of resources under the situation of uncertainty.

    Business forecasting

    Based on the trade cycle of the economy, the theory of income & employment, a theory of inflation, etc. managerial economics has to forecast the future of the business which is the most important issue for managerial economics.

    Therefore, without the help of traditional economics, business forecasting is not possible.

    Decision making

    Every decision ma process has various steps and techniques. In such a process, managerial economics uses the concept of traditional economics up to the required extent. In the decision-making process, all the key foundations are always identified by traditional economics.

    Therefore, managerial economics is the integration of economic theories with business practices to facilitate decision making and planning by management and which requires continuous and deep nexus between traditional economic analysis and managerial economics.

    Traditional economics VS managerial economics

    There is deep interdependence between traditional economics (microeconomic theories) and managerial economics for facilitating decision making and planning.

    However, there exist some major differences between traditional economics and managerial economics. The major points of difference are as below;

    Difference between managerial economics and traditional economics

    Traditional economics has both micro and macro aspects but managerial economics has microeconomic aspects only,

    Traditional is both positive and normative science whereas managerial economics is essentially normative,

    Traditional deals mainly with the theoretical aspect only but managerial deals with the practical aspect,

    Traditional analyses economic problems in both micro and macroeconomic view but managerial analyses the economic problems in microeconomic view only,

    Traditional is the study of both firm and individual but managerial economics is the study of problems of firms only,

    Traditional economics has wider scope but managerial economics has a limited scope,

    Under traditional economics microeconomics studies all the theories of factor pricing such as rent, wage, interest, and profit whereas in managerial economics, only the theory of profit management are studied,

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