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

Business Economics is described as a 'science' as well as an 'art'. Which of the following best justifies describing it as an art?

Business Economics is an art because it puts economic theory to practical use, applying principles and analytical tools to actual business problems and decisions. The other options describe its scientific side, namely systematic knowledge, laws and the positive-normative distinction.

  1. AIt uses a systematic body of knowledge with established cause-and-effect relationships
  2. BIt applies economic principles and tools to solve practical business problems and reach decisionsCorrect
  3. CIt formulates laws based on observation and data
  4. DIt separates positive statements from normative ones

Explanation

Science refers to a systematic body of knowledge, cause-effect relationships and laws. Art refers to the practical application of that knowledge to achieve objectives. Applying economic tools to real business problems is therefore the art aspect; the other options describe scientific features.

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