Introduction to Business Economics PDF

Introduction BUSINESS ECONOMICS Alina Fesenko Introduction What is Economics? Possible definition: it is a science that studies human behaviour as a rational activity to meet almost unlimited needs with limited goods that have alternative uses. Business Economics Introduction What is Econo...

Introduction BUSINESS ECONOMICS Alina Fesenko Introduction What is Economics? Possible definition: it is a science that studies human behaviour as a rational activity to meet almost unlimited needs with limited goods that have alternative uses. Business Economics Introduction What is Economics? Economics is a science that studies human behaviour as a rational activity to meet almost unlimited needs with limited goods that have alternative uses. Business Economics Introduction Basics: Economic Rationalism Rationalism “the practice of treating reason as the ultimate authority.” Consumer Producer Max Max satisfaction incomes Min Min cost expenses Business Economics Introduction Basics: Need Individuals have unlimited needs. Desire to Feeling of lack eliminate that lack Business Economics Introduction Basics: Good Anything that satisfies a NEED Can be: Free Unlimited - Economic Limited, sellable Final Satisfy a need - Producer Used to produce another good Material Can be measured, weight … - Non-material Services Business Economics Introduction Basics: Utility Utility is a measure of the satisfaction, benefit, or happiness an individual derives from consuming goods or services. The concept of utility is an elusive one. A person who consumes a good such as peaches gains utility from eating the peaches. But we cannot measure this utility the same way we can measure a peach’s weight or calorie content. There is no scale we can use to determine the quantity of utility a peach generates. Business Economics Introduction Basics: Economic Value vs. Market Value Both market value and economic value are widely used in business. Each valuation employs different criteria in their calculations. Market value is the price of something, such as an asset that's determined by the supply and demand of the asset in the marketplace. The economic value represents the maximum amount a customer is willing to pay for something. Business Economics Introduction What questions does ‘Economics’ respond to? Opportunity Need Resources Scarcity Choice cost What should be produced? How should goods and services be produced? For whom should goods and services be produced? Business Economics Introduction What is Business? Business Economics Introduction What is Business? A business (or firm) is an enterprise that provides products or services desired by customers. What is the goal of a business? Businesses are established to serve the needs of consumers by owners who seek to make profits. Sources: JEFF MADURA. Introduction to Business. 5th edition, Paradigm publishing 2010. Business Economics Introduction So, what is Business Economics? Business Economics ( or Managerial economics): - applies economic tools and techniques to business and administrative decision making; - helps managers recognize how economic forces affect organizations and describes the economic consequences of managerial behavior. Business Economics Introduction What does Business Economics study? Companies and entrepreneurs The environment in which they operate The decisions they make The effect of these decisions Business Economics Case Study Case Study Case Study Introduction Key Take-Aways Economics Economic Rationalism Need Good Utility Economic Value Market Value Questions that ‘Economics’ respond to Business Goal of a business Business Economics Business Economics [email protected]