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CA Foundation · Business Economics · Nature and Scope of Business Economics

Asha Foods Ltd., a Pune-based firm, studies how many workers and machines to use, and what the cost per unit will be at different output levels. These activities fall under which area of the scope of Business Economics?

These activities fall under production and cost analysis. Deciding the mix of labour and machinery and estimating unit costs at various output levels is a firm-level microeconomic function. National income accounting, trade policy and RBI monetary policy are not decisions made by an individual firm.

  1. AProduction and cost analysisCorrect
  2. BStudy of national income accounting
  3. CInternational trade policy formulation
  4. DMonetary policy formulation by the RBI

Explanation

Choosing the quantity of labour and machines and estimating per-unit costs at different output levels is production and cost analysis. It helps a firm identify the least-cost input combination and the optimal scale of output. The other options relate to national or policy-level decisions that a single firm does not make.

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