CA Foundation · Business Economics · Nature and Scope of Business Economics
Which of the following is a feature of Business Economics that distinguishes it from pure (theoretical) economics?
Business Economics is pragmatic: it picks relevant economic theory and uses it to solve practical problems faced by business managers. Pure economics is more abstract and concerned with building theory, whereas Business Economics focuses on firm-level decisions and their application.
- AIt is pragmatic and concerned with solving practical business problemsCorrect
- BIt is concerned only with deriving universal laws without reference to firms
- CIt ignores the assumptions of economic theory entirely
- DIt studies only the economy as a whole rather than the firm
Explanation
Business Economics is pragmatic and problem-oriented, selecting those parts of theory relevant to business decisions. Pure economics is more abstract and theory-focused. It does not ignore economic theory, and it focuses on firms rather than only the whole economy.
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