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

Which one of the following is generally treated as an issue within the microeconomic scope of Business Economics concerning the firm's internal operations?

Cost analysis at different output levels is a microeconomic issue within Business Economics, because it concerns the firm's own operations. Balance of payments, national income trends and fiscal deficit targets are macroeconomic factors forming the external environment, which the firm cannot control but must consider.

  1. AChanges in the country's balance of payments
  2. BTrends in national income and its distribution
  3. CCost analysis, including the estimation of the firm's cost of production at different output levelsCorrect
  4. DGovernment's fiscal deficit target for the year

Explanation

Microeconomic scope covers the firm's own decisions: demand analysis, production and cost analysis, pricing, profit management and capital management. Cost estimation at different output levels is a core internal problem. Balance of payments, national income and the fiscal deficit are macro-level environmental factors that the firm cannot control.

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