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Difference Between Economics and Business

Updated on April 30, 2024
Article byWallstreetmojo Team
Edited byAshish Kumar Srivastav
Reviewed byDheeraj Vaidya, CFA, FRM

What Is Economics vs Business?

Economics is used to analyze and understand human behavior and their decisions, and the level of impact on the nation’s overall economy. In contrast, business means exchanging goods and services between entities and people, usually for money.

Economics vs Business

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EconomicsEconomicsEconomics is an area of social science that studies the production, distribution, and consumption of limited resources within a society.read more and business are closely related to each other. Due to the complex nature of the global market and economies, the two are often considered the same. Although both are branches of social sciences, there are some obvious differences between them, but they go side by side.

Economics vs Business Comparative Table

BasisEconomicsBusiness
DefinitionEconomics is a study about understanding human behavior and its decisions and impact on its overall economy.Business is a process of exchanging goods and services between people and entities, which involves money.
Key conceptsKey concepts of economics include supply and demand, interest rate, exchange rate, international tradeInternational TradeInternational Trade refers to the trading or exchange of goods and or services across international borders. read more, the balance of payments, etc.Business does not have much-written theories or concepts as its main motive is to increase shareholders’ wealth.
TypesEconomics can be divided into different parts –
Microeconomics and macroeconomics And 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 size 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. Then, the companies define Key Performance Indicators (KPIs) to reach their objectives. Generally, KPIs are comparable across similar businesses and for year-on-year metrics.
Problem definitionEconomics represents various problems the nation faces, its individuals, and the government. The issues may include poverty, illiteracy, low economic growth, taxes, recession, living standard, etc.Businesses tend to solve various problems faced by the nation, and most companies are built on identifying such issues and then solving them for the individuals.

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What is Economics?

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

What is Business?

Business is a part of the larger ecosystem for exchanging goods and services between two or more people, or entities. Many external factors like the economyEconomyAn economy comprises individuals, commercial entities, and the government involved in the production, distribution, exchange, and consumption of products and services in a society.read more, the country’s political situation, and government laws and regulations impact the business and the organization.

Key Differences

Business and economics are branches of social sciences and generally go hand in hand. But there are some differences between the two highlighted in the article. For example, in economics, while providing key concepts and theories on how to frame government policies, business depends on the needs and necessities of the people. Therefore, it tends to give facilities and profit to the shareholders.

Economics vs Business Infographics

Economics vs Business Infographics

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