Nature and scope of environmental economics?

Answer 1

Nature of Business Economics :

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

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. 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.

Scope of Business Economics :

As regards the scope of business economics, no uniformity of views exists among various authors. However, the following aspects are said to generally fall under business economics.

1. Demand Analysis and Forecasting

2. Cost and production Analysis.

3. Pricing Decisions, policies and practices.

4. Profit Management.

5. Capital Management.

Answer 2

Managerial Economics has a close connection with economics theory (micro as well as macro-economics), operations research, statistics, mathematics and the theory of decision-making. Managerial Economics also draw together and relates ideas from various functional areas of management like production, marketing, finance & accounting, project management etc. A professional management economist has to integrate the concept and methods from all these discipline and functional area in order to understand and analyse practical managerial problems.

The following aspects thus constitute the subject-matter of managerial economics:

1. Objectives of a Business firm: The role of the top management is to decide what will be the objectives of a firm.

2. Demand Analysis and Demand Forecasting: The very first thing to find out in a new business venture is the nature and amount of demand for the product, both at present and in future, Demand analysis and forecasting therefore help in the choice of the product and in planning the output levels.

3. Production and Cost: Once the output is decided, the manager then needs to choose the best input-mix and the technology. He will maximize his profits only if he produces th desired level of output at the minimum possible cost.

4. Competition: Competition is one of the essential a manager bears in mind while making his decision of allocation of scarce resources.

5. Pricing and output: Once the quantity of output is ready for sale, the firm has to decide its price bearing in mind the conditions in the market, In fact pricing is a very important aspect of managerial economics as firm's revenue-earnings largely depend on its pricing policy.

6. Profit: Profit management is also a study in Managerial Economics.

7. Investment and Capital Building: For maximizing its profits, the firm needs to take care of its long-range decisions i.e.it has to evaluate its investment decisions and carry on a sensible policy of capital budgeting.

8. Product Policy, Sales Promotion and Market Strategy: An intelligent market management also helps the firm to grow. Market management includes product competition like advertising, product design etc.

The managerial economics, taking the help of economics concepts and relationships, tries to find out which course is likely to be the best for the firm under a given set of conditions.

*Managerial Economics and Traditional Economics:

*Managerial Economics and Operation Research:

*Managerial Economics and Statistics:

*Managerial Economics and the Theory of Decision-Making:

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Answer 3

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