# Business Economics: Definition and Types

![Business Economics](https://www.investopedia.com/thmb/afEbzn1TRFAuEIkrDzCJDvVM8wQ=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/business-economics.asp-FINAL-625037bc97be4d2291ea40d6d291c9f5.png)

*— Investopedia / Jiaqi Zhou*

> **Definition**
>
> Business economics is a brand of economics that focuses on factors that affect corporations, including financial, organizational, and managerial issues.

## What Is Business Economics?

Business economics is a field of [applied economics](https://www.investopedia.com/terms/a/applied-economics.asp) that studies the financial, organizational, market-related, and environmental issues faced by corporations. It assesses certain factors impacting corporations—business organization, management, expansion, and strategy—using economic theory and quantitative methods. Research topics might include how and why corporations expand and government regulation.

### Key Takeaways

*   Business economics studies the financial, organizational, market-related, and environmental issues corporations face.
*   Business economics encompasses concepts like scarcity, production factors, distribution, and consumption.
*   Managerial economics is one important offshoot of business economics.
*   The National Association for Business Economics is the professional association for business economists in the U.S.

## Understanding Business Economics

Economics is the study of the components and functions of a particular marketplace or economy, such as [supply and demand](https://www.investopedia.com/terms/l/law-of-supply-demand.asp), and the impact of the concept of [scarcity](https://www.investopedia.com/terms/s/scarcity.asp). Production factors, distribution methods, and consumption are important subjects of study within economics.

Business economics focuses on the elements and factors within business operations and how they relate to the economy as a whole. It addresses various concepts, including:

*   Economic principles and strategies
*   Standard business practices
*   The acquisition of necessary [capital](https://www.investopedia.com/terms/c/capital.asp)
*   Profit generation
*   The efficiency of production
*   Overall management strategy

It also includes the study of external economic factors and their influence on business decisions such as a change in industry regulation or a sudden price shift in raw materials.

Some of the most common research topics that fall under business economics include how and why corporations expand, the impact [entrepreneurs](https://www.investopedia.com/terms/e/entrepreneur.asp) have on business and the economy, how corporations interact with one another and consumers, and the role of governments in regulation.

Business economics allows economists, business leaders, and analysts to make important business, financial, and management decisions with the use of economic and quantitative analytical tools for pricing, competition, and understanding market dynamics.

> **Important**
>
> Business economics is a major offered by business schools and the economics departments of many colleges and universities.

## Types of Business Economics

### Managerial Economics

Managerial economics focuses on the microeconomic factors that influence the decision-making processes of an organization. The strategic decisions of corporations result in either a profit or a loss for the company. Managerial economic principles are intended to influence and guide corporate strategy and decisions toward the best outcomes for a company.

The study of managerial economics is applied to the public and private sectors along with for- and [nonprofit organizations](https://www.investopedia.com/terms/n/non-profitorganization.asp). These organizations must effectively assess the economic climate to remain solvent because all organizations require a source of funding to continue operations. 

Across all sectors of the business world, the main goal of managerial economics is to use all available resources within an organization, specifically maximizing production while at the same time minimizing any waste.

### Business Economics for Nonprofit Organizations

While the goals may differ, for-profit and nonprofits have similar business functions and require similar expertise. They must also strive to limit waste and maximize the overall usefulness of their available resources to maintain their viability as enterprises.

They must maintain the necessary capital to continue working within the economy, which requires them to use many of the same principles. For example, all types of organizations engage in advertising, community, or customer support and need leadership to make appropriate strategic decisions.

## Business Economics Organizations

There are various organizations associated with the field of business economics:

*   The National Association for Business Economics (NABE) is the professional association for business [economists](https://www.investopedia.com/terms/e/economist.asp) in the U.S. It is the largest international association of applied economists, strategists, academics, and policy-makers committed to the application of economics. NABE's mission is "to provide leadership in the use and understanding of economics."
*   The U.K.'s equivalent of NABE is the Society of Professional Economists (SPE). SPE is the leading organization serving professional economists in the U.K. and Europe.

## What Is the Scope of a Business Economics Degree?

A degree in business economics prepares students who want to pursue careers in consulting, business management, and finance. Students study economic principles like macroeconomics, microeconomics, business strategy, business administration and financial analysis—all of which help them develop their analytical, problem-solving, and critical skills.

## What Is the Role of a Business Economist?

A business economist is responsible for analyzing consumer behaviors along with economic and market trends to make predictions about the economy. They use this information to develop strategies and forecasts and help businesses make important decisions about pricing, market dynamics, and competition.

## How Much Does a Business Economist Earn?

The [Bureau of Labor Statistics (BLS)](https://www.investopedia.com/terms/b/bls.asp) doesn't have a specific category for business economists, but it does have one for economists. The median annual salary for economists in 2023 was $115,730. According to Glassdoor, though, the median annual salary for a business economist was $164,000.

## The Bottom Line

Business economics is a branch of economics. It uses economic tools and concepts and applies them to businesses and corporations. Some of the key areas that business economics studies include supply and demand, investment decisions, and organizational structure. A business economist's analysis can help companies make better decisions and improve their profitability.  

> **Article Sources**
>
> 1.  National Association of Business Economics. "[NABE Professional Conduct Guidelines](https://www.nabe.com/nabe/NABE/About/Professional_Guidelines.aspx)."
>     
> 2.  Society of Professional Economists. "[About the Society](https://spe.org.uk/about/about-us/)."
>     
> 3.  U.S. Bureau of Labor Statistics. "[Economists - Summary](https://www.bls.gov/ooh/life-physical-and-social-science/economists.htm#:~:text=$89%2C440-,The%20median%20annual%20wage%20for%20economists%20was%20$115%2C730%20in%20May,percent%20earned%20more%20than%20$216%2C900.&text=74%2C900-,Most%20economists%20work%20full%20time%2C%20and%20some%20work,than%2040%20hours%20per%20week.)."
>     
> 4.  Glassdoor. "[Business Economist Salaries](https://www.glassdoor.com/Salaries/business-economist-salary-SRCH_KO0,18.htm)."