Question

Although managerial economics is based primarily on microeconomics, explain why it is

also important for managers to understand macroeconomics.

Answer 1

 Microeconomics is concerned with the study of individuals and business decisions;

It deals with higher up country and government decisions.

On the other hand, macroeconomics deals with the behavior of the economy as a whole and not just on specific companies, but entire industries and economies. Macroeconomics looks at economy-wide phenomena, including Gross National Product (GDP) and how it is affected by changes in unemployment, national income, rate of growth, and price levels.

Knowledge in macroeconomics is a paramount factor in managerial economics and makes managers look beyond them microeconomics aspects to predict feature trends.