Nature Of Business Economics
Business Economics is the latest terminology used in Business organization. It denotes the application of economic theories to the business conditions and decision making in business. It involves a coordination process linking business methods with the formation of future plans and making decisions in business. To say in brief Business Economics is an Applied Science in the sphere of business organization. Business Economics has been defined by several writers in several ways and some of them are mentioned as follows :
Before discussing the Characteristics or nature of business economics, let us see some definitions given by various Economists.
Mec Iver and Meriam : Business Economics consists of the use of economic modes of thought to analyze business problems.
Spencer and Siegelman: Business Economics is the integration of economic theory with business practice for the purpose of facilitating decision making and forward planning by management.
Joel Dean: Business or Managerial Economics is the use of economic analysis in formulating policies.
The above definitions reveal the nature of Business Economics. It implies the application of economic theories to the business management and decision making in business. It serves as the best link between business and business practice.
Characteristics Or Nature Of Business Economics :
1. Micro economic nature : Business Economics is Microeconomics in nature because it deals with the matters of a particular business firm only.
2. Use of economic theories : Business Economics uses all economic theories relating to the profits, distribution of income etc.
3. Realistic one : Business Economics is a realistic science. It studies all matters concerning business organization by considering the real conditions existing in the business field.
4. Normative science : Business Economics is a normative science. 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 inquiry into the good and bad in decision making. Hence it is a normative science.
5. Use of Macroeconomics: Even though Business Economics has a the nature of Microeconomics, it also uses Macroeconomics approaches frequently. Certain matters in Macroeconomics like business cycles, national income, public finance, foreign trade, etc. which are essential for Business Economics. So, Business Economics uses the Macro Economics phenomenon for taking business decisions. For your help, the scope of business economics is discussed in a separate post.