Skip to content

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

Which of the following statements about the nature of Business Economics is most accurate?

Business Economics is prescriptive in approach because it suggests courses of action to managers, but those recommendations rest on positive analysis of facts and economic relationships. It is therefore neither purely descriptive nor purely ethical, and it is not identical to abstract economic theory.

  1. AIt is prescriptive in approach because it suggests courses of action to managers, while still relying on positive analysis of factsCorrect
  2. BIt is entirely descriptive and never recommends any action
  3. CIt is concerned only with ethical questions about what is fair
  4. DIt is identical to pure economic theory, which has no practical orientation

Explanation

Business Economics is pragmatic and normative or prescriptive in approach, as it advises managers on what to do. It still builds on positive analysis of facts and relationships. Calling it purely descriptive, purely ethical or identical to pure theory ignores its decision-oriented character.

Did you get it right without looking?

One question tells you little. A timed set on Nature and Scope of Business Economics shows your real accuracy, how long you take and where you lose marks.

Practise Nature and Scope of Business EconomicsFree diagnostic mock

More Nature and Scope of Business Economics questions