What is {term}? Business Economics

Business economics is a field of applied economics that studies the financial, organizational, market-related and environmental issues faced by corporations. Assessments are made using economic theory and quantitative methods. Business economics analyzes subjects such as business organization, management, expansion and strategy. Studies might include how and why corporations expand, the impact of entrepreneurs, the interactions among corporations and the role of governments in regulation.

BREAKING DOWN Business Economics

Economics refers to the study of the components and functions of a particular marketplace or economy, such as supply and demand, and the effect of the concept of scarcity. Within an economy, production factors, distribution methods and consumption are important subjects of study.

Factors Within Business Operations

Business economics focuses on the factors within business operations and how they relate to the economy as a whole. It addresses economic principles, strategies, standard business practices, the acquisition of necessary capital, profit generation, the efficiency of production and overall management strategy. Business economics also includes the study of external economic factors and their influence on business decisions such as a change in industry regulation or a sudden price shift in raw materials.

Managerial Economics

Managerial economics focuses on the microeconomic factors pertinent to the decision-making process with an organization. Corporations make strategic decisions that can result in a profit or loss. Managerial economic principles influence and guide corporate strategy and decisions.

Managerial economics apply to the public and private sectors and for-profit and not-for-profit organizations. All organizations must assess the internal and external economic climate to remain solvent because all organizations require a source of funding to continue operations. The goal of managerial economics is to utilize the available resources, maximizing production while minimizing waste.

While nonprofits may focus on raising donations, for-profits instead focus on the sale of goods or services. Each organization strives to limit waste to maximize the overall usefulness of the available resources. Each type of organization uses the same principles to meet the associated goals of maintaining the necessary capital to continue working within the economy.

Both for-profit and nonprofit organizations perform similar business functions and require similar expertise. For example, all types of organizations engage in advertising, community or customer support and require leadership to make appropriate strategy decisions.

Economics-Oriented Associations

In the United States, the National Association for Business Economics (NABE) is the professional association for business economists. The organization's mission is "to provide leadership in the use and understanding of economics." In the United Kingdom, the equivalent organization is the Society of Business Economists.