Summary of Business Economics

Main Objectives

• Achieving more profit with fewer resources.
• Effective and efficient use of resources.
• Making the right decisions, such as how much to produce and what price to charge.

Role of Business Economics

• Making business decisions using the principles of economics.
• Helping managers solve problems.
• Using various theories and concepts for optimal decision making.

Important Economic Theory

• Law of Demand
• Elasticity of Demand
• Law of Production
• Market Structure
• Demand Forecasting

Definition of Business Economics

• Integration of economics with business practice to facilitate decision-making by management.
• Using economic models to analyze business situations.

Key Philosophies and Definitions

• Professor Evan J. Douglas: Application of economic principles and methodology.
• Spencer and Siegelman: Integration of economic theory with business practice.
• Hale Stokes and Rothwell: Application of economic theory and analysis in practice.

Characteristics of Business Economics

• Microeconomics: Solving problems of individual business units.
• Normative Science: What should have been.
• Pragmatic: Practical approach and application-oriented.
• Management-Oriented: Assists in decision-making and forward planning.
• Multi-Discipline: A mix of economics, mathematics, statistics, etc.

Scope of Business Economics

• Demand Analysis and Forecasting
• Production Analysis
• Cost Analysis
• Market Structure and Pricing
• Inventory Management
• Resource Allocation
• Business Cycles and GDP

Importance of Business Economics

• Provides guidance in decision making.
• Helps solve business problems.
• Ensures optimal use of resources.
• Increases understanding of external factors.