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

Spencer and Siegelman described Business Economics as the integration of economic theory with business practice for the purpose of facilitating decision-making and forward planning by management. A student infers three things: (i) it is concerned with managerial decisions, (ii) it looks ahead through planning, (iii) it is limited to describing what has already happened in the firm. Which inference(s) are consistent with this definition?

Only inferences (i) and (ii) are consistent. The Spencer and Siegelman definition links theory with practice to aid managerial decision-making and forward planning. Limiting the subject to describing past events contradicts its forward-looking purpose, so inference (iii) is wrong.

  1. A(i) and (iii) only
  2. B(iii) only
  3. C(ii) and (iii) only
  4. D(i) and (ii) onlyCorrect

Explanation

The definition stresses facilitating decision-making and forward planning, so (i) and (ii) follow directly. Inference (iii) contradicts the forward-looking emphasis because the discipline is not confined to describing past events. Hence only (i) and (ii) are consistent.

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