Understanding business economics
Business economics is a field within applied economics which uses economic theory and quantitative methods to analyze business ventures and the factors that contribute to the diversity, organizational structure and relationship of firms to labor, capital and product markets.
Examples and characteristics of business economics
- Business economics means the application of economic concepts, theories and principles in business activities.
- Economics in business is related to microeconomics, mainly concerned with the problem of individual units.
- Economics in business is also related to macroeconomics. An entrepreneur should also be able to learn macroeconomic concepts such as National Income, Business Cycle, Labor Relations, Government Policy on taxation, budgets, monetary issues, and international trade, etc.
Business economic scope
Economics in business is primarily concerned with the application of economic principles and theories. The scope of business economics includes two areas of decision making, namely: Operational or Internal Problems. Environmental or External Issues
Operational or internal problems
- Finished Product Implementation
- Making Prototypes To Test
- Initial Product Planning
- Priority Product Selection
- Selection of Strategy in Production
Environmental or external problems
- Ecology
- Technology
- Political
- Social Beliefs and Attitudes
- Economy
Understanding examples of forms of international business economic relations
International trade is an activity or trading activity carried out by two different countries.
- Bilateral trade, trade between countries.
- Regional trade, trade carried out by several countries in one region. For example, ASEAN.
- Multilateral trade, trade between countries that is not restricted to a region.
International business economic theory
- Endowment factor theory
The theory stated by Heckscher-Ohlin refers to international and also interregional differences related to production costs that arise due to differences in the supply of production facilities.
- Absolute Advantage Theory
Adam Smith, an economist who disagrees with mercantilism, stated that the government should not try to control the market, starting from the direction, volume and composition of trade, it should not be fully controlled by the government.
- Theory of Comparative Advantage
Referring to the international business theory stated by Ricardo in 1817, it can be divided into domestic trade and foreign trade.
- Mercantilism Theory
Mercantilism emerged from an economic philosophy which believes that, a country deserves to be called a prosperous country if the country really only depends on the natural resources it has, meanwhile, the country also continues to try to increase prosperity by having policies that continue to increase exports. and trying to reduce imports.
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