CA Foundation · Business Economics · Nature and Scope of Business Economics
Which of the following best explains why Business Economics is called 'applied economics' or 'managerial economics'?
Business Economics is called applied or managerial economics because it applies economic theory and analytical tools to practical problems faced by business managers, such as pricing, costs, demand and investment decisions, rather than remaining purely theoretical or being confined to accounting or national income.
- AIt uses only descriptive statements and avoids any theory
- BIt applies the tools and concepts of economic theory to solve practical problems faced by business managersCorrect
- CIt studies only the national income of a country
- DIt deals exclusively with bookkeeping and preparation of financial statements
Explanation
Business Economics bridges economic theory and business practice by applying concepts such as demand, cost and pricing to real managerial problems. It is not limited to descriptive statements, national income or bookkeeping.
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