BE/U1 Topic 2 Difference between Business Economics and Economics
We are aware that Business Economics has evolved from Traditional Economics. Even though there are many similarities between them, but there are certain differences between the two.
- Economics focuses primarily with the theoretical aspect whereas Business Economics devotes with the practical aspect. The former is associated with concepts, theories, models and building theoretical framework. The latter is associated with the applications of the selected theories and concepts to solve business problems and help the business decision making process.
- Business Economics is fundamentally micro-economic in nature. It studies the activities of an individual firm or unit. There is an extensive application of the concepts and theories of microeconomics in it. The Economics has both micro and macro aspects within its purview.
- Business Economics is essentially normative in nature. But, the Economics is concerned with both positive and normative economics. Positive Economics explains the economic phenomena as they are, while normative economics discusses as to what they ought to be. Business Economics explains what objectives and avenues a business should pursue and how they are to be. Therefore, it is normative in nature.
- Economics studies the complex economic phenomena and rational human behaviour by developing certain meaningful and consistent assumptions, hypothesis and developing models. Business Economics endeavors to solve real life complex business problems. It selectively applies economic models with required modifications to solve the business problems.
- Economics concentrates only the economic aspect of the problems but Business Economics deals with some non-economic aspects of the problems along with the economic aspects.
- Business Economics focuses on the theory of profit only. Whereas, the Economics has within its ambit not only profit maximization but also other aspects like Utility maximization, distribution theories of wage, rent interest and welfare economics as well.
- The scope of Business Economics is restricted as compared to the scope of the Economics.
Economics is a social science that attempts to explain how the actions and decisions of firms, consumers and workers and governments affect the operation of the economy. It plays a huge role in our daily lives; it has links to international affairs and politics and is a subject that is often debated and discussed. It requires a fair deal of analysis and includes topics such as supply and demand, growth, inflation, globalisation and exchange rates.
Business Economics is more concerned with the actions and decisions taken by firms and focuses on topics such as marketing, staff in the organisation, accounting and finance, management, strategy and production methods. Business studies students will also have to cover some Economics, as it affects how businesses operate in their external environments.
Although Business Economics is not free from theory, it is less theoretical than Economics. Business Studies requires less understanding than Economics, but it by no means an easy subject; instead it involves more learning and therefore has more work to cover, and a great deal of new terminology to grapple with. Therefore you might say that Economics course has more depth, with the Business course having more breadth.