Nature of Business Economics is explained, as the business economics bridges the gap between economic theories and practical application of economic logic and tools. It eliminates the difference between the proposition of these theories and the real economic conditions.
The Nature of Business Economics is explained with the following points:
Business economics can be said as microeconomic in nature as it is based on the techniques of microeconomics. The decision making situations of single individual establishments are covered in business economics which includes the achievement of organisational goals and long term survival of the firm in the market. These decisions include:
Business economics is normative as it establishes rules which enable firms to attain their goals. It also provides valid decision rules so that the business environment and its behaviour can easily be understood.
As science establishes a relationship between cause and effect. Business economics also establishes a relationship between economic theories and decision sciences such as mathematics, statistics and econometrics to form suitable strategies so that overall example, supply is the positive function of the price which means that change in price is the cause but change in supply is the effect. It also adopts scientific methods to test the validity of the results. Thus, It is science its methodology.
Art is nothing but a practical application of knowledge. If we analyze business economics, we find that it has features of art. As its branches such as production, consumption and finance provide a solution to various economic problems. And also, it requires the practical application of rules and principles explained in Economic theories. Thus, it can be said as an art in its application.
Business economics is real science. It deals with all the matters of the organisation considering the real conditions existing in the business environment. It tries to solve real business problems which are faced by firms. Hence, it is pragmatic in nature.
Macroeconomics deals with the external environment as well which includes inflation, employment and income levels, tax policies, business cycle and foreign trade etc which affects the smooth functioning of the firm. Thus, business economics incorporates these macroeconomic factors to deal with the uncertain changing environment. Following aspects of macroeconomics are covered under business economics:
Business economics integrates all other disciplines such as mathematics, statistics, accounting and marketing etc to solve the problems in different fields of business. Therefore, it is interdisciplinary in nature.
Thus, the nature of business economics is related to the study of each and every element of the business which includes micro as well as the macro aspect of the business environment.
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Introductory Microeconomics - Class 11 - CBSE (2020-21)
Economics Educator
Mrs. Dilgeerjot Kaur holds a B.Com and M.Com degree and has over 9 years of teaching experience in microeconomics, macroeconomics, and business economics.
This guide covers "Nature of Business Economics - Explain with Examples", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Economics Class 11.
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