CHAPTER I
INTRODUCTION
1.1 BACKGROUND OF THE PAPER
for a layman ,the economic world is a complex place. usually, economic theories are simple
and hypothetical in nature. hance, most manager find a difference between the proposition of
these theories and the real economic world. This is where busines economics steps in . it
anables the aplication of economic logic and analytical tools and attemps to bridge the gap
between theory and practice.
1.2 Problem formulation :
A. What is nature of economics ?
B. What is business economics ?
C. Why is business economics important ?
D. What are the main objectives of business economics?
1.3 Purpose of the paper :
A. To find out what that isnature of economics
B. To find out what that business economics
C. Whats important about business economic
D. Purpose of business economics
CHAPTER II
THEORY AND DISCUSION
A. DEFINITION NATURE OF BUSINESS ECONOMIC
Traditional economics thery has dveloped alonng two line; normative and positive .normative
focuses on prescriptive statements, and help establish rules aimed at attaining the specified goals
of business. Positive, on the other hand, focuses on descriptions it aims at describing the manner
in which the economics system operates wiithout staffing how they should operate.
The emphasis in busines economics is on normative theory. Business ekonomi seeks to establish
rules which help busines firms attain their goals which indeed is also the essence of the word
normative. However, if the firms are to establish valid decision rules,they must thoroughly
understand their environment. These requires the study of positive or descriptive theory. Thus,
business economic combine the essential of the normative and positive economic theory, the
emphasis being more on the former than latter.
B. WHAT IS BUSINESS ECONOMIC
Business economics is a field of applied economics that studies the financial, organizational,
market-related, and environmental issues faced by corporations. Economic theory and
quantitative methods form the basis of assessments on factors affecting corporations such as
business organization, management, expansion, and strategy. Studies might include how and
why corporations expand, the impact of entrepreneurs, the interactions
among corporations, and the role of governments in regulation.
Understanding Business Economics
Economics, broadly, refers to the study of the components and functions of a particular
marketplace or economy, such as supply and demand, and the effect of the concept of
scarcity. Within an economy, production factors, distribution methods, and consumption are
important subjects of study. Business economics focuses on the elements and factors within
business operations and how they relate to the economy as a whole.
The field of business economics addresses economic principles, strategies, standard business
practices, the acquisition of necessary capital, profit generation, the efficiency of production,
and overall management strategy. Business economics also includes the study of external
economic factors and their influence on business decisions such as a change in industry
regulation or a sudden price shift in raw materials.
Managerial Economics
Managerial economics is a sub-focus of business economics that focuses on the
microeconomic factors pertinent to the decision-making process with an organization.
Corporations make strategic decisions that result in a profit or loss. Managerial economic
principles influence and guide corporate strategy and decisions.
Managerial economics apply to the public and private sectors and for-profit and not-for-profit
organizations. All organizations must assess the internal and external economic climate to
remain solvent because all organizations require a source of funding to continue
operations. The goal of managerial economics is to use available resources and maximize
production while minimizing waste.
Business Economics of Nonprofits
While nonprofits may focus on raising donations, for-profits instead focus on the sale of
goods or services. Each organization strives to limit waste to maximize the overall usefulness
of the available resources. Each type of organization uses the same principles to meet the
associated goals of maintaining the necessary capital to continue working within the
economy.
Both for-profit and nonprofit organizations perform similar business functions and require
similar expertise. For example, all types of organizations engage in advertising, community,
or customer support and need leadership to make appropriate strategic decisions.
Real-World Example of Business Economics
There are various organizations associated with the field of business economics. In the
United States, the National Association for Business Economics (NABE) is the professional
association for business economists. The organization's mission is "to provide leadership in
the use and understanding of economics." In the United Kingdom, the equivalent
organization is the Society of Business Economists.
C. WHY IS NATURE ECONOMIC IMPORTANT
Business economics plays an important role in decision making in an organisation. Decision
making is a process of selecting the best course of action from the available alternatives. Role
and responsibilities of managerial economics are explained below.
The following points explain the importance of business economics:
Business economics covers various important concepts, such as Demand and Supply
analysis; Short run cost and Long run costs; and Law of Diminishing Marginal Utility.
These concepts support managers in identifying and analysing problems and finding
solutions.
It helps managers to identify and analyse various internal and external business factors
and their impact on the functioning of the organisation.
Business economics helps managers in framing various policies, such as pricing policies
and cost policies, on the basis of economic study and findings.
By studying various economic variables, such as cost production and business capital,
organisations can predict the future.
Business economics helps in establishing relationships between different economic
factors, such as income, profits, losses, and market structure. This helps in guiding
managers in effective decision making and running the organisation.
CHAPTER III
CONCLUSION
A.CONCLUSION
The usefulness economics lies in borrowin and adopting the tolki from economic theory,
incorporating relevant ideas from othe disciplines to take better business decisions, serving as a
catalytic agent in the proses of decision making by different functional dapartments at the firms
level, and finally accomplishing a social purpose by orienting business decisions towords social
obligation.
BIBLIOGRAFI
