Managerial economics (or business economics) is economics applied in decision making. It is a branch of economics that applies economic theory and decision science methodology to solve business and managerial problems. Its objective is to bridge the gap between abstract economic theory and managerial practice. It is the systematic study of how resources should be allocated in such a way to most efficiently achieve a managerial goal.

We often find that economic theory and tools are not sufficient to tackle all kinds of managerial problems. We borrow a variety of techniques and tools taken from finance, operations research, and other business disciplines. In this sense, economic theory and tools on one hand and business disciplines on the other are blended into the subject.