Significance - Introduction to Business Economics, Business Economics & Finance | Business Economics & Finance - B Com PDF Download

Significance of Business Economics : 

The significance of business economics can be discussed as under :

1. Business economic is concerned with those aspects of traditional economics which are relevant for business decision making in real life. These are adapted or modified with a view to enable the manager take better decisions. Thus, business economic accomplishes the objective of building a suitable tool kit from traditional economics. 

2. It also incorporates useful ideas from other disciplines such as psychology, sociology, etc. If they are found relevant to decision making. In fact, business economics takes the help of other disciplines having a bearing on the business decisions in relation various explicit and implicit constraints subject to which resource allocation is to be optimized. 

3. Business economics helps in reaching a variety of business decisions in a complicated environment.

Certain examples are : (i) What products and services should be produced? (ii) What input and production technique should be used?
(iii) How much output should be produced and at what prices it should be sold?
(iv) What are the best sizes and locations of new plants?
(v) When should equipment be replaced?
(vi) How should the available capital be allocated? 

4. Business economics makes a manager a more competent model builder. It helps him appreciate the essential relationship Characterising a given situation. 

5. At the level of the firm. Where its operations are conducted though known focus functional areas, such as finance, marketing, personnel and production, business economics serves as an integrating agent by coordinating the activities in these different areas.

6. Business economics takes cognizance of the interaction between the firm and society, and accomplishes the key role of an agent in achieving the its social and economic welfare goals. It has come to be realised that a business, apart from its obligations to shareholders, has certain social obligations. Business economics focuses attention on these social obligations as constraints subject to which business decisions are taken. It serves as an instrument in furthering the economic welfare of the society through socially oriented business decisions.