CONCEPT OF BUSINESS

ECONOMICS
MEANING OF ECONOMICS
DEFINATIONS :
FORMS OF ECONOMIC ACTIVITIES

 Primary activities
 Secondary activities
 Tertiary activities
 Quaternary activities
 SIGNIFICANCE OR IMPORTANCE OF
ECONOMICS

 How to distribute resources in society

 Reasons of business cycle.
 To what extent should the government intervene in the economy? 
 The principle of opportunity cost. 
 Understanding Trade both domestic and international.
 Social efficiency. 
 Understanding the invisible hand of economy.
 Forecasts.
 How to deal with an economic crisis
 Evaluation.
 Behavioural economics 
 Applying economics in everyday life
 MEANING OF BUSINESS ECONOMICS
 Business economics is a field in economics that deals
with issues such as business organization, management,
expansion and strategy.
 It is a field in practical economics uses economic theory
and quantitative methods to analyze business
enterprises.
Levels of economic analysis

International economy

National economy
market

firm
Scope of Business economics
Micro economics
 Analysing Demand and Forecasting
 Production and Cost Analysis
 Inventory Management
 Market Structure and Pricing Policies
 Resource Allocation
  Theory of Capital and Investment
Decisions
 Profit Analysis
  Risk and Uncertainty Analysis
Macro economics
• Type of economic system
• Stage of the business cycle
• General trends in national income,
employment, prices, saving, and
investment.
• Government’s economic policies
• Performance of the financial sector and
capital market
• Socio-economic organizations
• Social and political environment.
Importance of business economics

1. Identifying, analyzing problems and finding solutions

2. Identify, analyze various internal & external business factors
3. Framing various policies
4. Predict the future
5. Establishing relationships between different economic factors
6. Reducing uncertainties and risks
7. Helps in planning and decision making
8. Cost control.
9. Establishing proper coordination.
10. Understanding external forces.
Micro economics
Difference between micro And macro
economics
Basis Micro economics
Definition Microeconomics is the branch of Economics that is related to the
study of individual, household and firm’s behaviour in decision
making and allocation of the resources. It comprises markets of
goods and services and deals with economic issues.
Deals with Microeconomics deals with various issues like demand, supply, factor
pricing, product pricing, economic welfare, production, consumption, Macroeconomics deals with various issues like national income,
and more. distribution, employment, general price level, money, and more.
Area of study Microeconomics studies the particular market segment of the
economy
scope It covers several issues like demand, supply, factor pricing, product
pricing, economic welfare, production, consumption, and more.
Variables The major variables involved are price, consumer’s demand, wages,
rent, profit, firm’s revenue, cost etc.
Significance It is useful in regulating the prices of a product alongside the prices
of factors of production (labour, land, entrepreneur, capital, and
more) within the economy.
Macro Economics
Macroeconomics is the branch of Economics that deals with the
study of the behavior and performance of the economy in total.
The most important factors studied in macroeconomics involve
gross domestic product (GDP), unemployment, inflation and
growth rate etc.
Macroeconomics studies the whole economy, that covers several
market segments
It covers several issues like distribution, national income,
employment, money, general price level, and more.
The major variables involved are aggregate demand, aggregate
supply, inflation, unemployment, Theory of international trade etc.
It perpetuates firmness in the broad price level, and solves the major
issues of the economy like deflation, inflation, rising prices
(reflation), unemployment, and poverty as a whole.
FORMS OF ECONOMY
 Problem of
Problem of full
employment
growth and
flexibility
CIRCULAR FLOW OF ECONOMY
 https://businessjargons.com/circular-flow-of-income.html