Nature and Scope of Business Economic

Lesson - 1 Business Economics- Meaning, Nature, Scope and significance Introduction and meaning : (Author : Dr. M.S. Khanchi) Business Economics, also called Managerial Economics, is the application of economic theory and methodology to business. Business involves decision-making. Decision making means the process of selecting one out of two or more alternative courses of action. The question of choice arises because the basic resources such as capital, land, labour and management are limited and can be employed in alternative uses. The decision-making function thus becomes one of making choice and taking decisions that will provide the most efficient means of attaining a desired end, say, profit maximation. Different aspects of business need attention of the chief executive. He may be called upon to choose a single option among the many that may be available to him. It would he in the interest of the business to reach an optimal decision- the one that promotes the goal of the business firm. A scientific formulation of the business problem and finding its optimals solution requires that the business firm is he equipped with a rational methodology and appropriate tools. Business economic meets these needs of the business firm. This is illustrated in the following presentation. Economic Theory and Methodology Business Economic Application of Economic Theory and Methodology to solving Business problems Decision problems in Business

Optimal Solution to Business Problems it may be that business economics serves as a bridge between economic theory and decision-making in the context of business. According to Mc Nair and Meriam, Business economic consists of the use of economic modes of thought to analyse business situations. Siegel man has defined managerial economic (or business economic) as the integration of economic theory with business practice for the purpose of facilitating decision-making and forward planning by management. We may, therefore, define business