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Home Articles

Business Economics for Commerce UGC NET

by Sreevidya M
February 24, 2022
in Articles, eBooks, UGC NET
Business Economics for Commerce UGC NET
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Table of Contents

  • Scope of Business economics
  • Significance of Business economics
  • What is the difference between economics and business economics?

Business economics is the 3rd unit in the syllabus of commerce UGC NET 2022. Business Economics/managerial economics is a connection linking two fields, which are management and economics. The management discipline concentrates on numerous ideas that help the administrative procedure of organisations. Conversely, economics is connected to an ideal apportionment of limited resources for achieving the set aims of organisations. Therefore, it can be supposed that managerial economics is a distinct subject of economics that can be useful in the business decision making of the establishment.

Scope of Business economics

Business economics comprises the use of different economic tools, theories, and methodologies for analysing and resolving various business complications. These business complications can be linked to demand and supply scenarios of an establishment, production levels, pricing, market constitution, and degree of competition. Let us examine the scope of business economics more comprehensively.

Click here to view Business financing PDF notes for UGC NET 2022

  1. Demand analysis and forecasting: Demand means the inclination or ability of people to purchase a product at a particular price. Demand analysis is a procedure of finding potential customers, the number of products they want to buy, and the price they are ready to pay for it. This procedure is vital for an establishment to examine the demand for its goods and produce them accordingly. In business economics, demand forecasting fills a significant position by aiding firms in business planning and deciding on tactical issues.
  2. Cost and benefit analysis (CBA): By analysing costs, management can guess the costs necessary for the successful functioning of the firm. Cost analysis aids companies in finalising concealed and unavoidable costs and taking actions for efficient cost control. It enables the firm to find the return on investment (ROI). In short, it is a method of comparing the costs and advantages of a specific project or activity. Business economics includes different features of cost and benefit analysis like cost-output relationships and cost control.
  3. Pricing decisions, policies, and practices: Pricing belong to the main part of business economics. It is a procedure of discovering the value of a good or service that an establishment gains in the trade of its product/service. The profit of an establishment greatly depends upon its pricing tactics and rules. Business economics comprises different pricing-related ideas, such as pricing approaches, product-line pricing, and price forecasting.
  4. Profit maximisation: Profit generation and maximisation is the important objective of every firm (excluding non-profit organisations). To maximise profit, firms should have full knowledge of different economic thoughts, such as profit policies and methods, and break-even analysis.
  5. Capital management: firms usually find it hard to make choices connected to funds investment. These choices need comprehensive knowledge and proficiency on different economic factors. To make sensible capital investment choices, an establishment should determine different features like the cost of capital and rate of return.

Click here to attempt a UGC NET 2022 paper 1 mock test

Significance of Business economics

As discussed, business economics performs an imperative part in decision making in an establishment. Decision making is a procedure of choosing the finest course of action from the existing possibilities. To make sensible choices; managers must have detailed knowledge of economic thoughts, philosophies, and tools. The following arguments clarify the significance of business economics:

  • Business economics encompasses many significant ideas, like demand and supply analysis; short and long-run costs; and marginal utility. These notions aid managers in finding and analysing complications and discovering new solutions.
  • It aids managers to recognize and analysing different internal and external business aspects and their influence on the working of the firm.
  • Business economics aids managers in informing numerous strategies, like pricing policies and cost policies, based on economic analysis and discoveries.
  • By analysing different economic variables like cost production and business capital, firms can forecast imminent events.
  • Business economics aids in founding relationships between different economic aspects, such as income, profits, losses, and market organisation. This aids in guiding managers in efficient decision making and ruling the establishment.

Click here to get detailed lecture notes on accountancy

What is the difference between economics and business economics?

Economics and business economics are dissimilar from each other in different facets. As said earlier, economics is a study of human behaviour in making decisions linked to the apportionment of resources. On the other hand, Business economics is concerned with managerial decision making in firms. The subsequent arguments differentiate between economics and business economics:

Economics Business economics
is a traditional subject a modern concept and is still developing
covers theoretical aspects covers practical aspects
problems of people and cultures are focused Focuses on the complications of companies
only economic factors are considered both economic and non-economic factors are taken into consideration
Both microeconomics and macroeconomics only microeconomics
has a wider scope and covers the economic issues of nations is limited to the economic difficulties of companies
can be applied to various fields a narrow approach that can be applied in selected areas

The unit, Business Economics covers wider areas than the ones discussed above. Learn more about the subtopics under the unit and start your preparation for commerce UGC NET 2022 paper 1 and 2 without much delay.Download the entri app for detailed notes and instructions from experienced educators for helping you prepare for commerce UGC NET 2022 .

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Sreevidya M

Post-Graduate in English Language and Literature, freelance writer and an SSC aspirant. Provides updates on notifications, syllabuses and dates for government exams.

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