Business economics is an area in applied economic sciences that utilize statistical methods and economic theory to examine the relationships among firms and the variables influencing the distribution of institutional resources, labor and capital, and the structures and relationships of businesses with other firms. This research seeks to explain the processes and patterns by which economies grow, develop, and maintain. It also attempts to describe the processes and patterns by which changes in technology and other economic drivers affect the rate of growth of a country’s economy. These theories and models within the field are utilized to forecast future economic activity and determine the nature of economic fluctuations.
Microeconomics is the study of the movement of prices through the economy. This branch of economics seeks to describe short-term price changes as they affect the level of aggregate demand, investment, and productivity. Aggregate demand refers to all the activities leading to the transfer of goods and services from production to consumption. Aggregate supply refers to the capacity of the economy to produce what it needs to meet its demand, which is essential for the proper functioning of the economy.
A major portion of the curriculum at any accredited business school or university emphasizes applied economics. Applied economics incorporates a variety of research methodologies in order to provide accurate insights into how market institutions and individuals affect the level of economic activity. The breadth of business studies includes topics such as microeconomics, macroeconomics, money, fiscal policy, and social science aspects of business. The concentration of this coursework focuses on how various economic policies affect firms both in domestic and foreign markets.
Economic theory refers to a range of ideas and concepts that have long been recognized as important factors in the determination of the successful operation of the firm. Among the most common economic theory topics are market structure, pricing, entrepreneurship, economic growth, economic institutions, environmental impact, external competition, institutional finance, asymmetric competition, innovation, and production management. Economics is heavily influenced by many other disciplines such as psychology, information, and some business research methods.
Decision making theory is the branch of economics that studies the decisions made by individuals in organizations. Those decisions reflect not only the knowledge of the individuals, but also their underlying economic variables. Theory can best be described as an attempt to explain how people make decisions. It is an attempt to put into real meaning the complex process by which individuals and firms select solutions to problems. Some of the topics considered in decision making are internal choices made by managers, decisions related to price, quality, and quantity of output and resources used.
Microeconomics deals with the market behavior of small firms. Small firms usually consist of two to ten employees. Microeconomics is the study of the actions of the firm-its internal processes, its market components, and its relationships with the market components of larger firms. The emphasis in microeconomics is on the price of a good or service relative to other goods and services that consumers can buy at the same price. It also studies the allocation of scarce resources by firms to achieve maximum efficiency.
macroeconomics deals with the overall behavior of an economy. This branch of business theory examines macroeconomic variables like government spending, interest rates, trade, inflation, and money. The scope of macroeconomics is much wider than microeconomics because it also includes investment, consumption, international trade, and government regulation. Some of the topics in this particular branch of business analysis include supply and demand analysis, national debt, balance of payments, and industrial cycles.
Business-cycle theory is one of the most important branches of business analysis. With this subject, an attempt is made to examine the interactions between economic factors. The concepts of business cycle are considered in the context of national economic indicators. The theories in this theory attempt to explain the changes in national income and budget structure and credit worthiness of banks, producers, investors, businesses, households, governments, and other economic entities through time. Some of the main concepts in this subject include the business cycle, business cycles, cyclical economic indicators, monetary policy, and financial institutions.