Tag: Economics

Economics!

The branch of knowledge concerned with the production, consumption, and transfer of wealth. The condition of a region or group as regards material prosperity. It’s the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behavior and interactions of economic agents and how economies work.

Macroeconomics analyzes basic elements of the economy, including individual agents and markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers. Macroeconomics analyzes the entire economy (meaning aggregate production, consumption, savings, and investment) and issues affecting it. Including unemployment of resources (labor, capital, and land), inflation, economic growth, and the public policies that address these issues (monetary, fiscal, and other policies).

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  • How to explain the Nature of Business Economics?

    How to explain the Nature of Business Economics?

    Nature of Business Economics; A Traditional economic theory has developed along two lines; viz., normative, and positive. Normative focuses on prescriptive statements and helps establish rules aimed at attaining the specified goals of the business. Positive, on the other hand, focuses on the description it aims at describing how the economic system operates without staffing how it should operate.

    Here is the article, How to explain the Nature of Business Economics?

    The emphasis in business economics is on normative theory. Business economic seeks to establish rules which help business firms attain their goals, which indeed is also the essence of the word normative. However, if the firms are to establish valid decision rules, they must thoroughly understand their environment [Hindi]. This requires the study of positive or descriptive theory. Thus, Business economics combines the essentials of the normative and positive economic theory, the emphasis being more on the former than the latter.

    Understanding the Characteristics or Nature of Business Economics

    The following nature are below;

    1. Microeconomic nature: Business Economics is Microeconomics in nature because it deals with the matters of a particular business firm only.
    2. Use of economic theories: Business Economics uses all economic theories relating to the profits, distribution of income, etc.
    3. Realistic one: Business Economics is real science. It studies all matters concerning business organization by considering the real conditions existing in the business field.
    4. Normative Science: Business Economics is a normative science. It studies the matters concerning the aims and objectives of a business firm. Determines the methods to be adopted for achieving such objectives. It also makes an inquiry into the good and bad in decision making. Hence it is a normative science.
    5. Use of Macroeconomics: Even though Business Economics has the nature of Microeconomics, it also uses Macroeconomics approaches frequently. Certain matters in Macroeconomics like business cycles, national income, public finance, foreign trade, etc. which are essential for Business Economics. So, Business Economics uses the Macro Economics phenomenon for taking business decisions.

    Another five Main Characteristics of Business Economics

    Some of the main characteristics of business economics are as follows:

    Micro in Nature:

    Business economics is microeconomics in nature. This is due to the study of business economics mainly at the level of the firm. Generally, a business manager is concerned with the problems of his business unit. He does not study the economic problems of an economy as a whole.

    The basis of Theory of Markets and Private Enterprises:

    Business economics largely uses the theory of markets and private enterprise. It uses the theory of the firm and resource allocation of the private enterprise economy.

    Pragmatic in Approach:

    Business economics is pragmatic in its approach. It does not involve itself with the theoretical controversies of economics. Yet it does not relegate the realities of business decision-making to the background by bringing in abstract assumptions. While economic theory abstracts from realities of the individual business units to build up its theories, managerial economics takes proper note of the particular economic environment in which a firm works.

    Normative in Nature:

    Business economics is also called normative economics which prescribes standards or norms for policymaking. Business economics is prescriptive rather than descriptive. Economic theory, we try to explain economic behavior: Business economics, we try to prescribe policies for a business manager which are most likely applied to achieve his objectives. In economic theory, we build ‘laws’ such as the law of Demand and the Law of Diminishing Returns. In business economics, we apply these laws for policy planning at the level of a firm.

    Macro Analysis:

    Macroeconomics which deals with the principles of economic behavior for the economy as a whole is also useful for business economics. A business unit operates within some economic environment which is in turn shaped by the behavior of the economy as a whole. Therefore, a business manager must know the external forces working in his business environment.

    How to explain the Nature of Business Economics - ilearnlot
    How to explain the Nature of Business Economics?
  • What is Demand? Meaning and Definition!

    What is Demand? Meaning and Definition!

    Demand is an economic principle that describes a consumer’s desire and also willingness to pay a price for a specific good or service. Holding all other factors constant, an increase in the price of a good or service will decrease demand, and vice versa. What is Glocalization? Meaning, Definition!

    Here are discuss What is Demand? Meaning and Definition!

    In economics, demand is the quantity of a commodity or a service that people are willing or able to buy at a certain price, per unit of time. The relationship between price and quantity demands stands also known as the demand curve. Preferences and choices, which underlie demand, can represent functions of cost, benefit, odds, and other variables. Determinants of (Factors affecting) demand Innumerable factors and also circumstances could affect a buyer’s willingness or ability to buy a good. 

    Some of the common factors are:

    The following are below;

    Good’s own price:

    The basic demands relationship is between the potential prices of a good and the quantities that would purchase at those prices. Generally, the relationship is negative meaning that a price increase will induce a decrease in the quantity demands. This negative relationship is embodied in the downward slope of the consumer demand curve. Also, The assumption of a negative relationship is reasonable and intuitive. If the price of a new novel is high, a person might decide to borrow the book from the public library rather than buy it.

    The principal related goods are complements and substitutes. A compliment is a good that uses for the primary good. Examples include hot dogs and mustard, beer and pretzels, automobiles, and gasoline. Perfect complements behave as a single good. If the price of the complement goes up the quantity demanded of the other good goes down.

    Definition of Demand:

    The following definitions below are;

    1. Commerce: A claim for a sum of money as due, necessary, or require.
    2. Economics: (1) Desire for certain good or service support by the capacity to purchase it. (2) The aggregate quantity of a product or service estimated to be bought at a particular price. (3) The total amount of funds which individuals or organizations want to commit to spending on goods or services over a specific period.
    3. The Law: An assertion of a legal right, such as to seek compensation or relief.

    The amount of a particular economic good or service that a consumer or group of consumers will want to purchase at a given price. The demand curve is usually downward sloping since consumers will want to buy more as the price decreases. Demand for a good or service exists determined by many different factors other than prices, such as the price of substitute goods and complementary goods. In extreme cases, demand may be completely unrelated to price, or nearly infinite at a given price. Along with supply, it is one of the two key determinants of the market price.

    Another Definition:

    Demand in economics is how many goods and services are being at various prices during a certain period. It is the consumer’s need or desire to own the product or experience the service. It’s constrained by the willingness and also the ability of the consumer to pay for the good or service at the price offered.

    They are the underlying force that drives everything in the economy. Fortunately for economics, people exist never satisfied. Also, They always want more. This drives economic growth and expansion. Without demand, no business would ever bother producing anything.

    What is Demand Meaning and Definition - ilearnlot
    What is Demand? Meaning and Definition!
  • What are Fundamentals of Economics?

    What are Fundamentals of Economics?

    What are Fundamentals of Economics? Meaning and Definition!

    Economics is the study of how these scarce and limit resources are used to make way for unlimited material wants and needs of human being. Broadly, economics is concerned with material things and how people make decisions about these things. Learn Fundamentals of Economics. It studies the subject of having and not having various material things in our life. The field of economics is extensive. It is also ever growing. Economists are willing to examine almost anything that affects the material aspects of human life. Most often, the economists voice concern over unemployment, inflation, interest rates, labor problems, government regulation, energy and international trade. The list of what interests the economists goes on and on and cannot exhaust. Different Types of Risk Faced by Banks Today!

    The Fundamentals of Economics

    Factors of Income, Economic Policy, Economic Systems, Demand-Supply and the Determination of Price, Macro Economics and Micro Economics, Unemployment and Full Employment, Inflation and Stable Prices, Inflation and the Interest Rate Fiscal and Monetary Policy, The Money Supply. Why are the Need Entrepreneurship for Small Business?

    Fundamentals of Economics!

    Better Understanding by Example

    The word ‘fundamental’ has the meaning of basics. When it comes to economics, it indicates the most basic macroeconomic indexes such as economic growth rate, inflation rate, and unemployment rate. Those most basic indexes compose fundamentals of one country and this so-called ‘fundamentals’ best describe the economic status of a country. To put it simply, it shows how strong one’s economy is; whether it’s weak or strong. It can refer to as stamina of a person. To run fast and long, we have to equip ourselves with strong fitness or we would collapse in no time. That’s what happened to emerging markets now. Once it was forecast that emerging markets are ready to run with strong fundamentals, which turn out to bogus. The reason this happened was that it’s hard to estimate fundamentals accurately. We chose to optimistic, and now we sank in the mire.

    Korea’s fundamentals are also yet to determine strong. The positive factors that constitute strong fundamentals of Korean economy are vast foreign exchange reserves amounting to over 300 billion dollars. Trade balance surplus, and soundness of government finance. On the other hand, there are also threatening factors such as high household debt. The high percentage of foreign investment in the domestic stock market. In general, Korea’s fundamentals are evaluating to strong enough but it is not reassuring.

    Financial Services Commission Chairman Shin Je-Yoon, made a remark on Korea’s fundamentals. “Considering US quantitative easing tapering, Korea’s economic fundamentals are sound and strong, unlike other emerging markets. But we have to scrutinize its impact and route. In this time of crisis, we should prepare not only to microeconomic threats. Which are easily noticeable but also to macroeconomic threats. Also, we should check four systematic risks: tipping effect in the economy, economic volatility, macroeconomic soundness, and mutual relationship with foreign nations.” He also emphasized that Korea should prepare a system that can pre-examine those threats and joint efforts of the Financial Services Commission. Financial Supervisory Service and Bank of Korea are needed.

    What are Fundamentals of Economics - ilearnlot