Why study BUSINESS ECONOMICS?
Introduction to Business Economics
Hey reader,
Do you know where do we use Economics in daily life?
I think your mom is the best example I can give to introduce economics to you. Did you ever notice what she does with the money your father earns? Yes, she allocates it according to the household needs. This is merely an example of how Economics helps us on a small scale. To learn more about Economics, let’s get started.
Economics is derived from the Greek word ‘Oikonomia’ which means ‘Management of house affairs’. It deals with how a person allocates his salary.
Economics is the study of how society uses it’s limited resources to maximise their gains.
It helps to maintain the balance between ‘Limited Resources’ and ‘Unlimited Wants’.
According to me:
Economics = Allocation ( Spend + Save + Invest ) + Profit
What is Business?
‘Business’ refers to all economical activities concerned with production. Main objective of business is to make profit despite the risk factors.
Business can be simply equated as:
Business = Production + Sale + Trade + Commerce
Now you are aware of their individual meaning. But is it same when combined?
Business Economics
Business Economics is the integration of economic theory and principles into a business.
Each business deals with different ;
- Kind of products
- Nature of products
- Target Market
- Consumers
So Business Economics can be given by:
Business Economics = Allocation of Resources + Decision Making
Now you might be thinking what’s the difference though?
Let me be clear. The difference between Economics and Business Economics is as follows:
- Business Economics is the integration of Economic theories and principles into a business. Whereas, Economics is what gives us those particular theories, to be applied in a business.
- Business Economics is limited in scope but Economics is wider in scope.
- Business Economics is micro(small) in nature. While Economics is macro(large) in nature.
- Business Economics holds account of individual units such as households, firms and industries. Economics holds account of aggregate units like economy of a country as whole (Total Demand, Supply, GDP, Inflation etc)
I would like to conclude that, Business Economics helps in maximum level utilization of resources by allocating them efficiently.
I hope I was able to convey the subject to you all. And hope you all were able to relate to your economical environment at both micro and macro level and understood the topic well.
Thank you for reading so far.
