What is Business Economics?
We humans have infinite needs but limited resources. This calls for the optimum allocation of resources in a manner that maximizes consumer satisfaction. The study of dealing with maintaining a proper balance between human wants and resources available is known as business economics.
In other words, business economics studies the various problems faced by corporations, including financial, environmental, market-related, and organizational issues.
What are the Types of Business Economics?
There are two main types of business economics. Let’s understand these -
Managerial Economics
Managerial economics deals with the study of microeconomic factors that affect the decision-making process in a business organization/corporation. The internal decisions taken by a company can result in both profit and loss, depending on the situation. Business economics principles focus on guiding corporations toward making the right decisions to ensure the best outcomes for companies.
Business Economics for Non-profit and For-profit Organizations
Business economics for such organizations involves helping the organizations limit their wastage and maximize the utilization of their resources. Even though non-profit and for-profit organizations might have different goals, they both strive to achieve the best results.
Business economics plays an important role in ensuring that these companies have the necessary working capital to carry out their day-to-day operations.
What are the Techniques used in Business Economics?
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Capital Budgeting: The technique used to determine the profitability of long-term investments.
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Cost Analysis: Examining the cost of operations of a business and identifying if it can be reduced.
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Regression Analysis: Determining the relationship between two different variables affecting the business in statistical terms.
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Break-even Analysis: Determining the minimum sales target that needs to be achieved to even out the costs incurred.
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Linear Programming: Technique used to optimize the value of a business i.e., output or cost.