What is economics that means meaning of micro and macro-economics, their importance, types, limitations, their interdependence, their differences and many more. Now, it is time to know how business and economics are attached to each other. That is what we mean by business economics.
During production and distribution process, a business firm faces the various types of issues and problems. The first problem is which product is to be produced or which services are to be provided that is how to allocate the resources. The second problem is how the price and output level of commodity is determined that maximize profit or how to achieve the goals? It implies the efficient use of resources. Thus, a business firm has to be concerned about the application of economic theory during the decision making to solve such problems. The economics related to such business activities is known by business economics and, in advanced form, it is also known by managerial economics.
Business economics, on the one side, explains how the economic forces affect the working of the firm and on the other side, it also helps to predict the upcoming consequences of present business activities. Thus, it tells us the implemented policies by business managers to achieve business goals. To optimize the achievement, business managers apply optimization techniques like mathematical calculus, programming, statistical tools, geometrical diagrams etc. And other side, they apply various economic models. Thus, business economics can be described as the use of theories and techniques of modern economics for decisions making problems of business firms. Here, it should be noted that, business economics deals not only with profit earning private firms but it also deals with non-profit making organizations like colleges, universities, government etc.