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ECO406 MIDTERM SOLVED PAPERS
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Economic theories try to predict and explain economic behavior. Usually, the economic theory starts with a model. For example, the theory of the firm assumes that a firm seeks to maximize profits and, based on this, predicts how much of a particular commodity the firm should produce within various forms of market structure. The profit maximization model exactly predicts the behavior of firms and therefore we accept it. That is, the methodology of economics is to accept a theory or model if it predicts accurately.
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Managerial economics is also closely related to decision sciences. These useful tools in mathematical economics and econometrics to construct and estimate the decision-making models are focused on determining the optimal behavior of the company. Mathematical economics is used for the formalization of economic models in the equational form postulated by economic theory.
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Services involve doing something for customers but not producing goods. is scarcely available. Economic systems: Then econometrics applies statistical tools (especially regression analysis) to real data for model estimation postulated by economic theory and for forecasting.
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Managerial economics has applications in both the profit and non-profit sectors. For example, a non-profit hospital administrator strives to provide the best medical care possible with limited medical staff, beds, and equipment. Using manager tools and concepts economy.