NAME: Qasam hakim aziz

ROLL NO: 59

CLASS: FYBBA(IB)

SUBJECT: Business Economics (Micro)

SUBMITTED TO: Dr Deepa Dani

TITLE: “Relevance of Economics to Business”

SYNOPSIS

• WHAT IS ECONOMICS?
I. Microeconomics
II. Macroeconomics
• RELEVENCE OF ECONOMICS TO
BUSINESS

TYPES OF ECONOMICS:
The study of economics is broken down into two disciplines.

• Microeconomics
Microeconomics focuses on how individual consumers and firms make decisions; these
individual decision-making units can be a single person, a household, a business/organization,
or a government agency. Analyzing certain aspects of human behavior, microeconomics tries
to explain how they respond to changes in price and why they demand what they do at particular
price levels. Microeconomics tries to explain how and why different goods are valued
differently, how individuals make financial decisions, and how individuals best trade,
coordinate, and cooperate with one another. Microeconomics' topics range from the dynamics
of supply and demand to the efficiency and costs associated with producing goods and services;
they also include how labor is divided and allocated; how business firms are organized and
function; and how people approach uncertainty, risk, and strategic game theory.

• Macroeconomics
Studies an overall economy on both a national and international level, using highly aggregated
economic data and variables to model the economy. Its focus can include a distinct
geographical region, a country, a continent, or even the whole world. Its primary areas of study
are recurrent economic cycles and broad economic growth and development. Topics studied
include foreign trade, government fiscal and monetary policy, unemployment rates, the level
of inflation and interest rates, the growth of total production output as reflected by changes in
the Gross Domestic Product (GDP), and business cycles that result in expansions, booms,
recessions, and depressions.

Micro- and macroeconomics are intertwined. Aggregate macroeconomic phenomena are

obviously and literally just the sum total of microeconomic phenomena. However, these two
branches of economics use very different theories, models, and research methods, which
sometimes appear to conflict with each other. Integrating the microeconomics foundations into
macroeconomic theory and research is a major area of study in itself for many economists.

RELEVANCE OF ECONOMICS TO BUSINESS:

Economics relates to business because it studies how international financial conditions
influence businesses and how businesses impact people's financial choices. Macroeconomics
studies national and international decisions and how those choices shape the larger business
world. Microeconomics examines individual behavior and seeks to explain how people respond
to changes in supply and demand wages.

• Useful in Business Organization

In any institution or firm. How should any production be done, and for whom should be
produced? The answer to all these questions remains only with the managerial economy
because he plays the most important role in these tasks. We can say that managerial economics
plays a very big role and significance in the important decisions of the business. So, this is a
very good Role and Importance of Managerial Economics in Choosing Right Decisions of any
business.

• Helpful in Chalking Out Business Policies

The art is only in business economics to maximize the profit of any institution and minimize
cost and whatever policies are made from this. It is very useful for any business or firm so that
every firm and business can get the maximum benefit. Then we can say that there is a huge
contribution of managerial economics to profit maximization and determining policies. It also
helps in doing it.

Useful in Coordination of Business Activities

Managerial economics is useful in coordinating the various activities of a business.

• Help in Business Planning

Business economics is very useful in planning a complete prospect among the successful
operation and production of any business or firm. Which acts as a balance bridge between the
production tools and operating systems and where to go. So, this is the biggest and important
role of business economics in any business or firm.
 •

Helpful in Cost Control

Managerial economics decides the business is going towards profit or loss. managerial
economics decides which way is good for the business. And it is only possible when managerial
economics plays a very big and important role in cost control decisions. Thus, Role and
Importance of Managerial Economics in Choosing Right Decisions is very powerful.

• Useful In Demand for Casting

Managerial economics provides useful tools for economics managers in demand forecasts
and is useful in demanding production planning. The managerial economy deals with future
losses easily. So that any business can be protected against future losses.

• Helpful in Profit Planning and Control

Managerial economics helps managers to decide on the planning and control of the benefits.
Managerial Economics is synchronized between the planning and control of any institution or
firm and hence its importance increases. Thus, it plays a huge role in business decisions. So,
its Role and Importance of Managerial Economics In taking Right Decisions.

• Helpful for Business Prediction

It is not known to anyone about what is going on in the business. Therefore, business economics
tells us that the business can see what is troubling in the future. So, then the managerial
economics gives its solutions. So that they can be avoided and the benefits can be increased.

• Helpful in Price Determination

Managerial Economics provides the necessary guidance in managing the pricing of its business.
This proves this in order to raise the required data in pricing and get the maximum benefit. So
that is the major role of managerial economics in the business decision critical. Without this,
no business can progress.
 •

Helpful in Solutions of Business Taxation Problems

Managerial Economics provides useful guidance in solving problems caused by various types
of tax done in business. And contracting of business helps reduce problems. To maximize profit
at low cost and minimize business costs.

• Useful in Understanding the Mechanism of Economic System

Managerial Economics/Business economics is useful in understanding the complex cause of

the entire economy. From which business decisions get help. The entire economy is very
complex but business economics solves it with ease. it is helpful to understand that in this way.

• Helpful in Analysis of Effects of Government Policies

Business economics/Managerial Economics helps in analyzing the effect of the various policies
of the Government in the operation of the business sector. Reducing their bad influence and
giving benefit to the good effect.

• Attempt to Put Out the Friendly Business

Managerial Economics guides managers to adjust to suit the external conditions of the business.

• Supporting the Manufacture and Use of Models

Managerial Economics creates an economic model for managers to inspire their use in business.
In order to maximize production and maximum profit, at least cost can be paved. Thus,
Business economics only tells how to manage everything in a way that everything should be
corrected in order to maximize profits. Business economics has a very important role and role
in doing all this work in business decisions.
 •

Gives the Right Direction

Inside the business, managerial economics has a very big role because it handles that business.
Shows the right path to every member of the business, and also gives the right direction of what
his duty and job.

• Maintains of Costs

It is the job of managerial economics to say how much to spend in business and how to spend
those expenses so that it can get more profit at lower costs and increase business growth.

• Useful in Showing the Path of Economic Well-Being

Managerial Economics inspires managers to operate the business in such a way that the path of
maximum economic welfare is paved.

• Distribute Profit

Inside any business, managerial economics tells us how to distribute the profits and invest in
where to make the business more profitable in the coming time and more growth in the business
field.

• Measurement of the Efficiency of the Firm

Managerial Economics provides useful tools for managers in measuring the efficiency of the
business firm. Managerial Economics plays big salient features and significance of managerial
economics In Choosing Right Decisions in helping business in many ways.