Business and Economics

Business and Economics

What is a ‘Business’ ?

A business is an organization or enterprising entity engaged in commercial, industrial or professional activities. A company transacts business activities through the production of a good, offering of a service or retailing of already manufactured products. A business can be a for-profit entity or a nonprofit organization that operates to fulfill a charitable mission.

Business Structures

The most basic business structure is a sole proprietorship. The owner of the business is the sole individual who takes ownership of assets and debt obligations. Alternatively, multiple individuals with shared duties can operate a business, and this business structure is a partnership. A business may operate as a corporation. Incorporating a business releases owners of financial liability of business obligations; however, a corporation has unfavorable taxation rules for the owners of the business. For this reason, a fourth business structure, called a limited liability company, is available, which combines the benefits of a partnership and corporation.

What is ‘Economics?’

Economics is a social science concerned with the production, distribution and consumption of goods and services. It studies how individuals, businesses, governments and nations make choices on allocating resources to satisfy their wants and needs, and tries to determine how these groups should organize and coordinate efforts to achieve maximum output.

Economic analysis often progresses through deductive processes, much like mathematical logic, where the implications of specific human activities are considered in a “means-ends” framework.

Economics can generally be broken down into Macroeconomics, which concentrates on the behavior of the aggregate economy. Macroeconomics studies the overall economy.  This can include a distinct geographical region, a country, a continent or even the whole world.

And Microeconomics, which focuses on individual consumers. Microeconomics focuses on how individual consumers and producers make their decisions. This includes a single person, a household, a business or a governmental organization.

Economic Indicators

Economic indicators are reports that detail a country’s economic performance in a specific area.

Gross Domestic Product (GDP)
The Gross Domestic Product (GDP) is considered by many to be the broadest measure of a country’s economic performance. It represents the total market value of all finished goods and services produced in a country in a given year or other period.
Retail Sales
Reported by the Department of Commerce during the middle of each month, the retail sales report is very closely watched, and measures the total receipts, or value, of all merchandise sold stores. The report estimates the total merchandise sold by taking sample data from retailers across the country. This figure serves as a proxy of consumer spending levels. Because consumer spending represents more than two-thirds of the economy, this report is very useful to gage the economy’s general direction.
Industrial Production
The industrial production report, released monthly, reports on the changes in the production of factories, mines and utilities in the country. Which estimates the level of production activity in the economy.

Consumer Price Index (CPI)
The Consumer Price Index (CPI), measures the level of retail price changes (the costs that consumers pay) and is the benchmark for measuring inflation. The CPI compares the price changes month after month and year after year.

Difference between Business and Economics:

Economics is a Social Science that attempts to explain how the actions and decisions of firm, consumers, workers and government affect the operation of the economy. It requires a fair deal of analysis and includes topics such as Supply and Demand, Growth, Inflation, Globalization and Exchange rates. And,

Business is more concerned with the actions and decisions taken by firms and focuses on topic such as Marketing staff in the organization, Accounting and Finance, Management, Strategy and Production methods.

Business Economics:

The theories of business economics is applied along with quantitative methods to analyze business enterprises and the factors contributing to the diversity of organizational structures and the relationships of firms with labour, capital and product markets. Sometimes, the term business economics, is used as synonymous to industrial economics/industrial organization, managerial economics, and economics for business.

Still, there may be substantial differences in the usage of ‘economics for business’ and ‘managerial economics’ with the latter used more narrowly. One clear difference between these would be that business economics is wider in its scope than industrial economics in that it would be concerned not only with “industry” but also businesses in the service sector. Business economics is a field of applied economics that studies the financial, organizational, market-related and environmental issues faced by corporations. Assessments are made using economic theory and quantitative methods. Business economics analyzes subjects such as business organization, management, expansion and strategy. Studies might include how and why corporations expand, the impact of entrepreneurs, the interactions among corporations and the role of governments in regulation.

SOME MCQ RELATED TO THE FIELD BUSINESS ECONOMICS:

1.Prime Minister of India recently unveiled an agricultural package during his visit to 53rd meeting of the National Development Council. What is the size of the package?

A. 10,000 cror

B. 15,000 crores

C. 20,000 crores

D. 25,000 crores

E. 30,000 crores

Answer:     D. Rs. 25,000 crores

2. Which of the following rates is not decided by the Reserve bank of India?

A. Bank Rate

B. Repo Rate

C. Reserve Repo Rate

D. Income Tax Rates

E. All of these

Answer:  D. Income Tax Rates

3. Prices of iron ore in global market registered a substantial rise in last few months (24%). This attributed to the huge demand of the same in global market. Which of the following is a major importer of iron ore?

A. France

B. South Africa

C. Singapore

D. Britain

E. China

Answer:   E. China

4. Which of the following private sector banks brought its equity share (follow on public issue) for which the price was set as 940 per equity ?

A. ICICI Bank

B. Karnataka Bank

C. UTI Bank

D. HDFC Bank

E. None of these

Answer:   A. ICICI Bank

5. Asia Pacific Economic Cooperation Business Meet was organised in September 2007 in ?

A. New Delhi

B. Beijing

C. Tokyo

D. London

E. Sydney

Answer:    E. Sydney

6. Which of the following is a public sector unit?

A. TCS

B. ICICI Bank

C. TESCO

D. BHEL

E. All of these

Answer:   D. BHEL

7. India’s Foreign Exchange reserves declined sharply in recent past. What was the main reason for the same?

A. Heavy demand of the same by foreign tourists

B. Import of wheat from Pakistan and South Korea

C. Application of Rupee Value

D. Instability in coalition government in Centre

E. None of these

Answer:   C. Application of Rupee Value

8. The Government of India put a ban on export of which of the following commodities at the price below the price of the same in domestic market?

A. Steel

B. Chemical Fertilizers

C. Pharma Products

D. Electronic goods

E. None of these

 Answer:   A. Steel

9. As per the recent agreeement between India and one other country the Indian Rupee can be easily  swapped with .

A. TAKA

B. RIEL

C. KYAT

D. YEN

E. RUBBEL

Answer :  E. RUBBEL

10. The financial markets of which of the following countries were badly affected by sub prime crisis ?

A. RUSSIA

B. BRAZIL

C. UK

D. USA

E. None of these

Answer:    C. UK