Question

How is managerial economics related to other disciplines like finance, accounting, budgeting?

Answer 1

Managerial economics -finance :

• Managerial economics relates to finance when statistical and mathematical modeling is applied to optimize resource allocation decisions on stock holders, budgeting issues, salary decisions or any matter related to finance
• Managerial economics analysts access financial data
• They apply the necessary statistical and mathematical models to that data
• And thus create optimal decision criteria for decision makers
• The most common finance application of managerial economics is capital budgeting

Managerial economics - accounting :

• It is closely related to accounting where it is mainly concerned with recording the financial operations of a business firm
• Managerial economics depends on the accounting information as an important source of data for decision making process
• The accounting helps managerial economists to analyze the future course of action, that is whether the firm should improve its productivity or close downthey provide the sort of data the managerial economics need to solve the business problems correctly.

Managerial economics - budgeting :

• Managerial economics uses budget information for planning if expenditure for assets and financing proposed capital outlays
• Budgeting is most important function of managerial decision making
• Capital budgeting helps the managerial economists to estimate the net cash flow from a project and also to understand the time value of money