Everyday a number of decisions are made by us as individuals or entrepreneurs. These decisions are no longer made on intuition or on hunch. Almost all such decisions, directly or indirectly, relate to economic variables like demand, supply, stock, price, input, output, profit, finance, etc. Traditionally, the problem of optimal decision by individuals and firms has been studied under micro economic theory. However, now business economics is providing solution to the problems faced by' business firms. It provides a tool-box of analysis and a technique of thinking for business firms, enriching the conceptual and technical skills of managers facing decision problems. Business economics is useful in decision making by business firms regarding the least cost input mix, product mix, production technique, level of output, price for the product, investment decision amount of advertising outlay and-its distribution between different media, etc. It involves the application of economic concepts, precepts3, tools, techniques, principles and theories by business firms for decision making and forward planning by establishing plans for the future. It estimates the relationship like demand, demand elasticity’s, input-output, cost-output, etc. for forecasting so as to make forward planning in business. Business economics consists of the use of economic modes of thought to analyses business situations. It may be viewed as Economics applied to decision problem solving at the firm level and not merely on explaining the behavior. It is that branch of Economics which links abstract theory and business practice by identifying problems, organizing information and evaluating all feasible alternatives to choose the best there from. Business economics is thus, concerned with those analytical tools which are useful in decision making through proper allocation of scarce resources between various activities of the firm.
1. The personal liability of the partners under partnership is unlimited (just like sole proprietorship), unless the partnership is registered under the limited partnership Act 1907. In this case, liability is limited to the subscribed capital of partners. However, in most cases a partner is liable for the debts and obligations of the firm, which were incurred, while he was a partner. In limited partnerships, one partner must be with unlimited liability and those with limited liability are not allowed to take part in the management of the firm nor withdraw their financial contribution while the partnership exists.
2. The death or departure of a partner thus dissolves the partnership.
3. Precept implies proposition, policy prescription or value judgment. Several concepts together can be built into a precept. 'Optimal allocation of scarce resources is the essence of management' is an example of precept. analyses the decision problems. It also makes use of quantitative techniques to measure the impact of different factors and policies. Thus, business economics is both conceptual as well as mathematical.