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Difference Between Business Economics and Economics

The key differences between business economics and economics are: (1) Business economics applies economic principles to business problems and decision-making, while economics is the broader study of how individuals, businesses, governments and nations allocate scarce resources. (2) Economics studies both macroeconomics and microeconomics, while business economics focuses primarily on microeconomic analysis at the level of the firm. (3) Economics has a wider scope studying both individual and firm economic behavior, whereas business economics concentrates specifically on analyzing firm-level issues like profit maximization.

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Tanishq Jain
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6K views2 pages

Difference Between Business Economics and Economics

The key differences between business economics and economics are: (1) Business economics applies economic principles to business problems and decision-making, while economics is the broader study of how individuals, businesses, governments and nations allocate scarce resources. (2) Economics studies both macroeconomics and microeconomics, while business economics focuses primarily on microeconomic analysis at the level of the firm. (3) Economics has a wider scope studying both individual and firm economic behavior, whereas business economics concentrates specifically on analyzing firm-level issues like profit maximization.

Uploaded by

Tanishq Jain
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Unit –I

Lecture Difference Between Business Economics and Economics.


(A)Business Economics
(I)Business Economics is a field of applied Economics that studies the financial,
organizational, market-related and environmental issues faced by corporations. Assessments
are made using economic theory and quantitative methods.
(II)Business economics is the discipline which deals with the application of economic theory
to business management
(III)Business Economics analyses subjects such as business organization, management,
expansion andstrategy.
( Studies might include how and why corporations expand, the impact of entrepreneurs, the
interactions among corporations and the role of governments in regulation.)
(B) Economics
(I)Economics is a social science concerned with production and distribution and
consumption of goods and services. It studies how individuals, businesses,
governments and nations make choices on allocating resources to satisfy their wants
and needs, and tries to determine how these groups should organize and coordinate
efforts to achieve maximum output.
(II)The social science Economics concerns the use of scarce resources to maximize
satisfaction of unlimited wants.
(C)Difference between Business Economics and Economics
(i)Whereas business Economics involves application of Economics principles
(ii)Whereas Business Economics is Micro-Economics in character, Economics is both Macro
and Micro-Economics
(iii)Business Economics, through micro in character, deals only with the firm and has nothing
to do with an individual’s economic problems. But Micro-Economics as a branch of Economics
deals with both Economics of the individual as well as Economics of the firm.
(iv)Under Micro-Economics as a branch of Economics, distribution theories, wages, interest
and profit are also dealt with but in Business Economies mainly Profit Theory is used other
distribution have not much use in Business Economics. Thus, the scope of Economics is wider
than of Business Economics.
(v)Economics theory Hypothesizes economic relationships and builds economic model but
managerial economics adopts, modifies and reformulates economic models to suit the
specific conditions and to serves the specific problem-solving process. Thus, Economics gives
the simplified model, whereas Business Economics modifies and enlarges it.
(vi)Economic Theory makes certain assumptions whereas Business Economics introduces
certain feedbacks such as objectives of the firm, multi-product nature of manufacture,
behavioural constraints, environment aspects. Legal constraints, constraints on resource
availability, etc.

DIFFERENCE BETWEEN ECONOMICS AND BUSINESS ECONOMICS


Area of Difference Economics Business Economics

Nature Economics deals with the It deals with application of economic


body of the principle itself principles to the problem’ to the
problems of business firms.

Nature of Economics deals with both It basically deals with application of


Economic micro and macro-economic normative micro-economic principles
Principles Studied principles-normative as well and involves value judgements.
as positive It is concerned with what decisions
ought to be made.

Scope of Study Micro economics as a multi- Though business economics is micro in


facet branch of economics. It character, it deals with problems of the
deals not only with economic business firms
problems and business firms
but also individual’s economic
problems.
Thus, Economics has a wider
scope of study
Focus of Study Under micro economics as a The main focus of study pf business
branch of Economics, economics is profit theory. Other
distribution theories like rent, distribution theories have not much
wage and interest are dealt relevance here.
along with theory of profit.

Approach to Economics theory takes Business economics adopts, modifies or


Study assumptions, hypothesizes reformulates already existing economic
economic relationships and models to suit the specific conditions
generates economic models and serves the specific problems of the
business firms.

Methodology Economic theory avoids many Business economics is pragmatic in the


complexities and makes sense that it introduces some realistic
simplified assumptions to aspects such as objectives of the firm,
solve complicated theoretical resource, legal and behavioural
issues. constraints etc. And attempts to solve
somereal-life complex business
problems.

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