Difference Between Economics and Business

Economics vs Business Differences

Economics is used to analyze and understand human behavior along with the decisions that are taken by them and the level of impact the same has on the nation’s overall economy whereas business refers to the process where goods and services are exchanged between entities and people usually in exchange of money.

Economics and Business are closely related to each other and due to the complex nature of the global market and economies, often the two are considered as same. Although, both are branches to social sciences, however, there are some stark differences between them but they go side by side to each other.

While the business provides goods and services to the customer’s economics through the relationship of supply and demand decides how much quantity of goods to produce.

What is Economics?

Economics is a part of the social sciences that studies human behaviour with regard to incentives or resources available. Economics studies the actions and decisions taken by the employees, firms, customers, individuals and governments and their impact on the larger economy.

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What is Business?

Business is a part of the larger ecosystem for the exchange of goods and services are exchanged between two or more people, entities. A lot of external factors like the economy, the political situation of the Country, government laws and regulations impact the business and the organization.

Economics vs Business Infographics

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Key Differences

Economics vs Business Comparative Table

BasisEconomicsBusiness
DefinitionEconomics is a study about understanding human behaviour and the decisions taken by them and their impact on the overall economy of the nation.Business is a process of exchange of goods and services between people and entities which involves the exchange of money
Key conceptsKey concepts of economics include supply and demand, the rate of interest, the rate of exchange, international tradeInternational TradeThe trading or exchange of products and/or services across international borders is referred to as international trade. It frequently includes other risk factors such as exchange rate, government policies, economy, laws of the other nation, judicial system, and financial markets that impact trade between the two.read more, the balance of payments etc.Business does not have much-written theories or concepts as its main motive is to increase shareholder’s wealth.
TypesEconomics can be divided into different parts –
Microeconomics and macroeconomicsAnd MacroeconomicsMacroeconomics aims at studying aspects and phenomena important to the national economy and world economy at large like GDP, inflation, fiscal policies, monetary policies, unemployment rates.read more
Pure and Applied economics
Industrial and Financial economics
There are different types of businesses  –
Sole proprietorship
Partnership
Company
Limited liability business
Measurement and analysis involvedEconomists measure and value the changes in the variables. The measurement can be absolute or relative. Economics helps in measuring market interactions on the value of various products.Businesses have short term and long-term goals based on their mission and future vision. The businesses define Key Performance Indicators (KPIs) to reach their objectives. KPIs are generally comparable across similar businesses and for a year on year metrics.
Problem definitionEconomics tends to define various problems faced by the nation, its individuals and the government. The problems may include poverty, illiteracy, low economic growth, taxes, recession, the standard of living etc.Businesses tend to solve various problems faced by the nation and most businesses are built on the identification of such problems and then solving them for the individuals.

Conclusion

Both business and economics are branches of social sciences and generally go hand in hand. But there are some stark differences between the two which have been highlighted in the article. Economics while providing key concepts and theories on how to frame government policies, business depends on the needs and necessities of the people and tends to provide facilities and earning a profit for the shareholders.

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