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Business Economics tutorial in one place for beginner to know about basic topic like economics, demand, supply, cost and production analysis.

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It involves using microeconomic and macroeconomic theories to analyze operational and environmental issues organizations face. The scope of business economics.

What is Business Economics? Business Economics is the integration of economic theory with business practice for the purpose of facilitating decision.

According to him the subject matter of Economics is the study of how wealth is produced and consumed. Smith's definition is known as wealth definition. 1 This.

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Economics is the science that deals with production, exchange and consumption of various commodities in economic systems.

Earlier, the scope of economics was limited to the utilisation of scarce resources to meet the needs and wants of people and society.

16 Jan 2021 — 16 Jan 2021What Is Business Economics? Definition, Scope, Importance.

19 Apr 2024 — 19 Apr 2024It focuses on using economic theories and instruments in real-world business settings to support organizational and corporate decision-making.

Balance of Payments (BOP) Accounts

Current account includes trade in goods (exports/imports), services (tourism, software), income (interest/dividend) and transfers (remittances).
Capital/financial account includes FDI/FPI, loans, banking capital flows and other investment.
If the current account shows a deficit, it must be financed by capital inflows or by using foreign exchange reserves.

Thus, BOP shows how a country earns and spends foreign exchange through current and capital transactions.

Difference:

Change in quantity demanded occurs due to a change in the price of the good; it shows movement along the same demand curve (extension/contraction).
Change in demand occurs due to non-price factors (income, tastes, related goods, ads); it causes a shift of the demand curve (right/left).

Hence, price change causes movement; other factors cause shift.

Methods of Measuring National Income (Exam-Style)

National income (GDP/NI) can be measured using three standard approaches. In principle, all three should give the same aggregate because production creates income and income leads to expenditure.

1) Product/Output method (Value Added)

Sum value added by all producers.
Value added = output value − intermediate goods.
Avoids double counting.

2) Income method

Sum factor incomes: wages, rent, interest, profit and mixed income.

3) Expenditure method

Sum final spending: C + I + G + (X − M).

Comparison table:

Method	What is added?	Main advantage	Common issue
Output	value added	avoids double counting	data gaps in informal sector
Income	factor incomes	shows distribution of income	under-reporting of profits/income
Expenditure	final spending	useful for demand analysis	measuring consumption accurately

Conclusion: Each method uses a different angle, but all aim to measure the same total economic activity.