Economics and business are a today’s global topic. Business is an economic activity. Although both of them are terms used in social science, yet they are very different from each other.
Economics and business go along with each other. Economics is the study of the demand and supply of products in economy. Business offering of products and services and selling them.
Economics vs Business
The main difference between Economics and Business is that economics refers to the study of people use their limited resources to fulfil their requirements whereas business refers to the economic activities in which the goods and services are being exchanged to get money.
Comparison Table Between Economics and Business
| Parameters of Comparison | Economics | Business |
| Definition | It is the study of people use their limited resources to fulfil their requirements. | It is the economic activities in which the goods and services are being exchanged to get money. |
| Key Metrics | Exchange rate of currencies, fiscal deficit, per capita income, repo rate, GDP growth rate, etc. | Net profit margin, financial leverage, gross profit margin, asset turnover ratio, etc. |
| Expands | It intends to expand the welfare of the society. | It intends to expand the prosperity of the shareholders. |
| Issues Addressed | Economics focuses on the issues like the taxation, interest rates, poverty, government expenditure, unemployment, etc. | Business focuses on the issues like the organic and inorganic growth, product differentiation, product positioning, cost minimization, etc. |
| Main emphasizes on | It put stress on how the inadequate resources can yield the best. | It put stress on the best use of inadequate resources. |
What is Economics?
The subject of economics is a branch in social studies that is used in order to study the actions and decisions of the firms, individuals, employees, governments and customers so as to know their influence on the country’s economy.
Economics is a wider topic that covers many topics such as the mathematics, politics, international relationships and many more. The basic concepts behind the economics are the supply and demand, rate of exchange, inflation, balance of payment, production, rate of interest, international trade and many more.
With the help of economics, people are able to think logically and read various theories so that they can apply it in the better understanding of the implementation of the economies all around the world. People can easily understand the complex issues of the economy so as to make maximize the benefit out of it.
The different types of economics are the micro-economics and macro-economics, industrial and financial economics and pure and applied economics. The microeconomics consists of the economic decisions dealt at the micro level. The macroeconomics consists of the economic decisions dealt at a large level.
In industrial economics, there is a study of industries and markets and corporate sectors including the firms of all levels and sizes. In financial economics, the main focus is on the monetary activities.
In pure economics, it deals with the principle lines of the arguments and the pure logic. The applied economics is an implementation of the economic theories in order to predict the probable results.
What is Business?
A business is referred as an economic activity where there is an exchange of goods and services between two or more people in order to earn money. The basic requirements to run any business are the funds and the customer base. The business requires funds in various forms and a customer base to which the products can be sold so as to make profits.
Business is a collection of a variety of activities and behavior that consists of accounting, business strategy, sales and marketing, finance, product development and analysis, human resource and management. It also studies the rapid change in the environmental conditions in order to know the impact it has on the overall value.
It also considers the other factors of economy, government rules and regulations and the political condition of a nation in order to know the impact on any organization and any industry.
The basic concept behind any business is to make profit and also to amplify the wealth of the shareholders. Increase in wealth of any business results in an increase in the prices of the stock of a company that results in an increase in the net wealth of the shareholders.
There are many types of businesses like the partnership, limited liability, sole proprietorship and company. A company is under the ownership of the shareholders that invest in the business capital so as to run its activities.
Partnership is a business in which there is a relationship between two or more people responsible for carrying the activities of the business. The profit and loss obtained in the business are shared by all partners.
In sole proprietorship, the business is owned and run by a single entity or person. In limited liability, the liability of any partner cannot cross the money already invested in a partnership or in a limited liability company.
Main Differences Between Economics and Business
- Economics is the study of how people use their resources so as to fulfil their requirements whereas business is an economic activity where there is a exchange of goods and services to get money.
- The main types of economics are micro-economics and macro-economics, industrial and financial economics and pure and applied economics whereas the main types of business are partnership, limited liability, sole proprietorship and company.
- The basic concepts of economics are supply and demand, rate of exchange, production, etc whereas the basic concept of business is to make profit and to amplify the wealth of the shareholders.
- Economics intends to expand the society’s welfare whereas business intends to expand the shareholders’ prosperity.
- Key metrics of economics are exchange rate of currencies, per capita income, GDP growth rate, etc whereas key metrics of business are net profit margin, gross profit margin, etc.
Conclusion
Both the social science terms are very different from each other. Economics focuses on how the limited resources can be put in for the best use. Business not always focuses on how scarce resources produce the best. Business is a part of economics and yields an economic output.
References
- https://proformas.ljmu.ac.uk/4001BUSHN.pdf
- https://books.google.com/books?hl=en&lr=&id=zwPSLEFLwmkC&oi=fnd&pg=PR12&dq=Economics+and+Business&ots=lPtvIDwWSV&sig=JG8sZOe7kTWBLkHUj9xl4UZCyCk