Nature of business economics

Nature of business economics

1. Meaning of Business Economics

2. “Business economic consists of the use of economic modes of thought to analyse business situations.” According to Mc Nair and Meriamm

3. SPENCER AND SIEGELMAN “the integration of economic theory with business practice for the purpose of facilitating decision-making and forward planning by management.”

4. Nature Of Business Economics Business Economics is micro economic in its nature because it deals with matters of a particular business firm only. Business Economics is more concerned with the decision-making situations of individual establishments. Micro Economic Nature

5. Price output relationship of perfectly competitive firm Demand forecasting for a new product Law of returns to scale Law of demand Law of diminishing marginal utility………………….

6. Government policies – Public Finance International Trade Anti-monopoly measures Employment level National Income Uses Macro Concepts

7. Business Economics uses all economic theories relating to the profits, distribution of income etc Uses Theories of Firm

8. Theory of firm states that the primary aim of the firm is to maximize wealth. Decision making in managerial economics generally involves establishment of firm’s objectives, identification of problems involved in achievement of those objectives, development of various alternative solutions, selection of best alternative and finally implementation of the decision.

9. It studies the matters concerning the aims and objectives of a business firm . It determines the methods to be adopted for achieving such objectives . It also makes enquiry into the good and bad in decision making. – Example……. pricing strategy Normative Science

10. The philosophy of pragmatism is based on the notion that an ideology, theory, or proposition is true if it works in achieving the desired outcome It is not interested in mere theoretical discussions but in practical application of the theory. Pragmatic

11. The word "pragmatic" is often used to describe a decision-making theory that is entirely built on empirical data. It examines the outcomes of decisions by digging deep into the details of the decision-making process leading to a logical, successful result

12. Tools of Mathematics, statistics and operational research, Accounts, Finance in decision making and forward planning………… econometrics…- example methods of demand forecasting. Uses Modern Tools/Multi-disciplinary

13. Human and Behavioural factors, Environmental factors( Environmental laws), technological consideration that influences business decisions Gives importance to non economic consideration

14. C ulture , religion , the role of family, class, tradition, role of the individual, social and political dependence , the role of overnment , religion, language as a resource of human capital , corruption, factors that belong to the social pathology. of economic freedom

15. Some other variables also used in modern economic empirical research are democracy, rule of law, the state share of spending in the economy, legal structures……………

16. Conclusion Business economics is useful because: ( i ) It provides tools and techniques for managerial decisions , (ii) It gives answers to the basic problems of business management, ( iii) It supplies data for analysis and forecasting

17. Conclusion (iv) It provides tools for demand forecasting and profit planning , (v) It guides the managerial economist . Thus , Business economics offers a number of benefits to business managers. It is also useful to individuals, society and government( decision making, Profits…).