Business Economics: Business Economics is also known as Managerial Economics is nothing but the application of economic theories to business problems. Economic concepts,methods of analysis and economic theories are applied in decision making. Business economics is therefore applied Economics.
“Use of economic analysis is formulating policies is known as Managerial Economics“_JOEL DEAN.
“Business Economics is the integration of economic theory with business practice for the purpose of facilitating decision making and forwarding planning by management“_Spencer and Siegelman.
“Managerial Economics is economics applied in decision making”._Hanyes,Mote and Paul.
1. Product decision:
These decision related to the products the firm will produce and offer for sale.Some are of short-term significance. They are the selection of styles,sizes and sales features of the product next year. Long-run decision concern major additions,modification or abandonment of the firm’s facilities. The important product decisions are made by the board of directors.
2. Pricing Decisions:
Pricing of a commodity by a business firm is a vital decision that has to be made by a manager. Price of a commodity will ascertain to a good extent how much volume of its commodity it will be able to sell. Price along with rate per unit and productivity sold will ascertain its profits.
In making a decision of its commodities a firm has to approximate demand for its commodities and also to approximate cost-productivity association. Its approximation of demand and manufacturing cost will ascertain how much volume of productivity it should manufacture to optimize its profits.
3. Quantity decision:
Firms will have to decide how much of each product they shall produce. These decisions are passive.
when firms decides the product and the price,quantity depends on the actions of buyers. production is normally in anticipation of demand. Demand analysis may be enable a firm to improve its sales to certain extent.
4. Technological Decision:
The other vital decision to be taken by business firms associates to the preference of a technique of manufacture. A technique of manufacturing integrates the use of definite mixture of aspects, particularly labour and capital to manufacture a product.
Generally several substitute techniques of manufacturing a product are available between which a firm has to choose. Some manufacturing techniques integrate the use of associatively more labour as contrasted to capital and are thus termed as capital intensive techniques.
5. Advertising Decision:
Advertising outlay plays a vital role in the market structure of monopolistic rivalry and differentiated oligopoly where firms have to compete to sell their commodities. Advertisement is necessary to endorse sales of commodities. By the way of advertisement management of a firm tries to manipulate the consumers about good quality of its commodities.