Environmental Issues

Environmental Issues: There are certain issues of macroeconomics also that form a part of managerial economics. These issues relate to general business, social and political environment in which a business and industrial firm has to operate. Some of the important factors are- the type of economic system of a country, business cycles, industrial policy of the country, trade and fiscal policy of the county, taxation policy of the country, price and labor policy, general trends in economy with regard to the production, employment, income, prices, saving and investment etc., general trends in foreign trade of the country, social factor’s like value system of the society, general attitude and significance of social organizations like trade unions, producers unions and consumer’s co-operative societies etc.; social structure and class character of various social groups, political system of the country. The management of a form cannot have any control over these factors. The need in this regard is to adjust the plans, policies and programs of the firm according to these factors so that their adverse effect on the firm may be offset.
The various aspects pointed above represent the major uncertainties, which a business firm has to reckon with, Viz., demand uncertainty, price uncertainty, profit uncertainty and capital uncertainty. We can, therefore, conclude that subject matter of managerial economics consists of applying economic principles and concepts for adjusting with various uncertainties faced by a business firm.