Define Business Economics. What do you mean by Business Economics?
Economics affects daily lives of individuals, households, organizations, industries, and nations. Everytime you make decisions like - what to purchase, how much to purchase, how much to save, where to invest, or anything related to best use of your hard-earned salary; you make an Economic decision. Everyone wants to get rich, increase their wealth, hold over productive resources, earn more and more profit, raise their standard of living, and make their future secure. Attainment of all this requires proper understanding of economic issues.
Business Economics, also called Managerial Economics, is the application of economic theory and methodology to business. Business involves decision-making; and business economics serves as a bridge between economic theory and decision-making in the context of business. Economic theories, economic principles, economic laws, economic equations, and economic concepts are used for decision making.
Definitions of Business Economics
Following are the popular definitions of Business Economics according to different philosophers:-
According to Mansfield, “Managerial economics is concerned with the application of economic concepts and economics to the problems of formulating rational decision making."
According to Spencer and Seigelman, “Managerial Economics is the integration of economic theory with business practice for the purpose of facilitating decision making and forward planning by management.”
According to Douglas, “Managerial economics is concerned with the application of economic principles and methodologies to the decision making process within the firm or organization. It seeks to establish rules and principles to facilitate the attainment of the desired economic goals of management”.
According to Davis and Chang, “Managerial economics applies the principles and methods of economics to analyze problems faced by management of a business, or other types of organizations and to help find solutions that advance the best interests of such organization.”
Studying the above definitions it can be concluded that Managerial Economics is a link between two disciplines, which are management and economics. The management discipline focuses on a number of principles that aid the decision-making process of organizations. On the other hand, economics is related to an optimum allocation of limited resources for attaining the set objectives of organizations. Therefore, it can be said that managerial economics is a special discipline of economics that can be applied in business decision making of organizations.