THE RELEVANCE OF THE CONCEPT OF MANAGERIAL ECONOMICS IN BUSINESS DECISION-MAKING IN INDONESIA'S DIGITAL ERA

Abstract

Managerial economics is a branch of applied economics that bridges microeconomic theory with decision-making practices within modern business organizations, particularly in the digital era characterized by exponential technological transformation and increasingly complex market dynamics. This study aims comprehensively to identify, analyze, and evaluate the relevance of key managerial economics concepts including price elasticity of demand, profit maximization, game theory, information asymmetry, cost-benefit analysis, algorithmic price discrimination, and incentive theory—to real-world and contemporary business phenomena in Indonesia during the ongoing digital transformation era. The research employs a quantitative systematic literature review methodology encompassing 27 accredited scientific articles published between 2021 and 2025 from various indexed databases (SINTA, Scopus, ProQuest). In-depth analysis findings demonstrate that price elasticity concepts are highly relevant to public service tariffs and digital platform pricing policies with elasticity magnitudes ranging from -0.45 to -1.85 depending on product category and market segmentation; information asymmetry has been identified as the fundamental root of problems in Indonesia's fintech lending ecosystem and digital agricultural supply chains with adverse selection rates reaching 12-18 percent; game theory elegantly explains competitive behavior and strategic interactions in the telecommunications and ride-hailing oligopoly markets of Indonesia; and algorithmic price discrimination has become standard practice on e-commerce and ride-hailing platforms resulting in consumer surplus transfers of 15-22 percent to producers. The study's findings indicate that deep and systematic understanding of managerial economics concepts is not only academically relevant but also possesses strong and immediate practical implications for managers, business practitioners, entrepreneurs, and policymakers navigating the complexity, dynamics, and uncertainty of Indonesia's exponentially evolving digital market. This study explicitly recommends integrating comprehensive managerial economics literacy into business and economics education curricula at the university level, and formulating competition policies that are more adaptive, nuanced, and responsive to the specific dynamics of Indonesia's digital market.