The scope of business economics encompasses most of the issues that an organization or manager faces. Therefore, the scope of business economics has a wide scope. Because a business may face internal/ organisational as well as environmental and/or external issues, there are various economic theories applicable to such issues.
As already explained above, the scope of business economics encompasses several issues. Some of the topics covered are: internal issues, external issues, economic theory, macroeconomic theory, firm decision making and its aspects, and firm growth. Among these, only some of them are actually concerned with the actual issues faced by firms in reality. These other topics provide theoretical basis for the managers. In fact, many of them have been studied already. But the real problem is, whether they are relevant in practice?
External economics of a business firm refers to the best affordable products how the firm handles external activities like trade, finance, production process, and the like. On the other hand, internal economics of a business firm refers to how a business firm processes its internal activities like production process and planning. This topic includes questions like how a firm decides which inputs should be used for the production of a product and how those inputs affect the output/cost.
The scope of business economics also includes the topic of microeconomics. Microeconomics is also known as micro-micro-commodities. These are the input factors that determine the cost structure of a specific micro-economic activity. An example would be the cost of production of a particular good through the process of physical movement. The scope of micro-micro economics takes into consideration those inputs that cannot be reproduced, like unique parts or even money. It also includes the scope of value pricing, production scheduling, pricing of financial transactions, etc.
There is also the scope of business economics, which studies the scope of environmental issues. This can either be a broad or a narrow scope. A broad scope of this topic includes natural resource management, pollution, waste management, and energy consumption. On the other hand, a narrow scope of this topic covers issues that impact only specific sectors or areas. For example, an area experiencing acid rain will naturally be focused on industrial concerns, and pollution affecting only urban centers will be focused on municipal concerns.
One other important area of study in business economics includes the scope of decision-making. In this scope, the analysis of business-to-business transactions takes place. It involves the study of firms’ decisions to purchase certain inputs from another firm, or their decisions to allocate scarce resources to satisfy market conditions. In all these cases, the firm’s decisions exert powerful influences over the level of production, allocation of resources, and prices.
The scope of business economics also includes the scope of demand analysis. In simple terms, demand analysis looks into the analysis of the changes in demand. In this case, demand is not solely based on supply. Instead, it also takes into account the demand structure of a firm. For instance, a firm may be forced to expand if the demand in the market is not enough to sustain its operations. In addition, the expansion also boosts sales, which, in turn, boosts demand; and, therefore, expands profits for the top 10 echo.
Finally, one other major area of study in business economics which includes the scope of macroeconomics. The scope of macroeconomics studies the interactions among external factors such as government policies, external banks, and other external actors. these studies to determine how these external factors affect the market conditions of a country. Examples of these external factors include taxes, exchange rates, and central banking.
