Economics and business economics both terms are used in the context of economics, while many people consider both terms as the same but the reality is that both terms have many differences and utility when it comes to using both economics and business economics for practical as well theoretical purposes. Let’s look at some of the differences between economics and business economics –
Economics VS Business Economics
Meaning
Economics refers to that field of study that focuses on all the factors whether they are macro or micro factors and study how people allocate scarce resources both individually as well as collectively towards the betterment of society. In simple words, economics is more social-oriented in the sense that it studies the impact of choices of individuals not only on individuals but the nation as a whole while business economics refers to that part of economics that is used exclusively for business by the companies and hence it places emphasis on the impact of various macro and microeconomic factors on the business of the company. In simple words, business economics is more business-oriented as it is concerned about the impact of all economic factors on the business of the company.
Theoretical and Practical Approach
In the case of economics, all ideas and concepts are theoretical in the sense that while they do present the overall picture of the economy but one cannot do anything about that, hence if inflation is rising then economics will point how and why inflation is rising but it won’t tell you that how to tackle that inflation for your benefit but when it comes to business economics it uses the concepts of economics to solve the real-time problems which come when the company does business. Hence in a way, economics is more theoretical and less practical in nature while business economics is more practical in nature when one compares it with economics.
Universality
In the case of economics, the concepts and principles are universal in nature in the sense that whether you live in Europe or America, or Asia the theories and principles of economics will not change. Hence theories of motivation or theories of wages or demand and supply dynamics are the same across the world but when it comes to business economics one has more flexibility implying that one can use economics models and principles according to situations arising in business and thus there is no universality when it comes to business economics.
Scope
Economics is concerned with a wide variety of topics like unemployment, inflation, profit maximization, rent theories, and so on and thus one can say that economics is like a sea just like the sea is vast and endless in the same way economics is a vast and detailed subject but when it comes to business economics it deals with only profit maximization approach and business-related economics aspects and ignores the rest and hence its scope is very limited and is a small part of economics subject.
Individuals and Companies
Since economics has a wider scope it deals and has answers to all problems whether its an individual problem or company problem or country’s problem but when it comes to business economics it deals only with company-related matters and hence it has no answers or solutions for individuals problems. Hence for example if a company is making low profits and it has an opportunity to set up a factory near a lake then business economics will consider it as a good investment as it will lead to an increase in profits for the company without analyzing the impact of this decision on the environment of the country. In simple words, economics is more concerned about general welfare and has long-term goals while business economics is more concerned about a company’s welfare and has short-term goals.
As one can see from the above that economics and business economics are completely different from each other as while economics is broader in scope as it tends to cover everything related to the economy of the country while business is narrower in scope as it tends to cover the matters or issues related to the business of the company only.