Business administration is the study of methods for improving the profitability of an individual business enterprise. The tools of economics analysis are used in business administration courses and students applying to the undergraduate business major are required to take introductory economics courses.
Business administration also calls on tools such as accounting and marketing that are more narrowly concerned with the management of a business enterprise. Economic analysis has had an enormous impact on the development of business administration studies and on other social sciences in the second half of the 20th century and will continue to do so into the 21st century. If a student decides to pursue majors in both economics and business administration, the University of Washington designates this as a double degree, which requires completion of credits.
Economics or Business? In reality, that is only a tiny fraction of what is actually a very large field of study. Economics is a social science about how people use and exchange limited resources like food, labor, minerals, and, yes, money.
As an even shorter definition, one could say it is the study of scarcity and choice. The way we study economics today is a far cry from the way people studied it in the past. When Aristotle wrote about the subject over years ago it was more of a philosophy than anything else. He believed that economics, politics, and morality were firmly joined together, and that the goal of economics was to help people lead morally good and fulfilled lives.
This is even reflected in the etymology of the word "economics", which comes from ancient Greek words meaning "rules of the household". Our modern view of the subject comes mostly from several 18 and 19th century thinkers, one of the most famous of those being Adam Smith.
The thinkers of that time helped the field become much more analytical and rigorous than it was in previous centuries. Their work has since been expanded upon and economic analysis is now extremely complex and aided by mathematical formulas which helps extract trends from massive amounts of data.
The information provided by economic analysis can help families, businesses, and governments better manage their resources in whatever ways they see as beneficial. International students pursuing an economics degree will quickly realize there are many different ways to divide economics. The better the model is, the more useful it is in helping economists make predictions.
Economists assume that economic events and phenomena do not occur at random, but are determined by underlying and understandable causes.
Unlike the pure scientist, economists cannot undertake controlled experiments, so they must test their models in different ways. Statistical analysis of actual economic data can provide a flow of information from which to build models and test hypotheses. For example, by gathering data about changes in house prices it is possible to deduce factors that cause house prices to go up or down, and by how much.
Economists use index numbers to help make comparisons between countries and over time. Correlation analysis can help determine the strength of particular causal relationships so that strong and weak relationships can be identified. For example, it might be possible to demonstrate that, of all the factors that have contributed to falling house prices, the reduced availability of credit is the single biggest factor. Professional economists apply their skills of description, analysis, model building, and prediction to generate knowledge and, from this, provide advice to private firms, to governments and other organisations.
In providing advice, the economist will always make an assessment of the other options that could have been chosen. For example, a large petrol refiner and retailer may be faced with a significant rise in the costs of crude oil — should it now raise price?
To find out why, see: oligopoly. As a social science, economics attempts to use the principles and methods of science to explain economic behaviour. This involves making positive statements about the economic world. In contrast, normative statements are based on opinion and value judgement. This statement cannot be tested because it not based on anything testable. If there is an agreed definition of fairness, and it can be measured, then it might be possible to test the effect of the change in house prices on the degree of fairness experienced by a certain identifiable group of people defined as rich.
Therefore, this statement is normative, impossible to verify, and based on opinion rather than fact. Economics is a social science, and, unlike the physical sciences, cannot engage in controlled experimentation to demonstrate how variables are connected. Improve your marketability and meet emerging employers' needs with an advanced degree.
What is Economics? Economics is More than Numbers. Types of Economists. American Economic Association. Economics is Personal Microeconomics. Learn More About Microeconomics.
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