what is business economics? what are the chief characteristics.
Answers
Answer:
Normative in Nature:
Business economics is also called normative economics which prescribes standards or norms for policy making. ... In economic theory, we build 'laws' such as the law of Demand and the Law of Diminishing Returns. In business economics we apply these laws for policy planning at the level of a firm.
Answer:
The teaching of economics is, thus, an abstract theorization with little connection to business.
But theoretical models of economics are to be applied in business areas. Once theoretical models of economics are applied in business, the gap between economics and business gets minimised.
Characteristics of Business Economics:
Business economics is essentially concerned with the various decisions of a business enterprise. The unit of study of business economics is the firm. Thus, managerial economics studies decision-making behaviour of a firm or an industry. Microeconomics takes into account the behaviour of smaller economic agents, such as a firm or a consumer or an input owner.
It deals with the operation of a consumer, a firm involving the determination of price of a commodity, revenue, costs and, hence, profit levels, etc. Managerial economics is, thus, essentially microeconomic in character as it has its origin in theoretical microeconomics. Profs. H. C. Petersen and W. C. Lewis suggest that managerial economics should be thought of as applied microeconomics.