Business Economics: Roles of Economics in Managerial Decision Making

This essay covers the concept of business economics and the roles of economics in managerial decision making. It also discusses scarcity, choice, and opportunity cost in economics, and the use of production possibility frontier. The essay analyzes the external environment of Aston Martin using PEST analysis and discusses market structure, equilibrium, and market operations.

Business Economics

Table of Contents
INTRODUCTION ..........................................................................................................................3
Main Body.......................................................................................................................................3
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business economics refers to the economic the prices, reasoning and certain methodology
which is being used to certain issues or the challenges in the real world. This respective essay
will cover the business economics and the roles of economics for the decision-making of the
manager. Moreover, This will also understand the concept of scarcity, choice & opportunity cost
in the economics(Hauser, Eggers and Güldenberg, 2020). This respective essay will also present
the use of the production possibility frontier to show and they explain the importance of the idea
of opportunity cost in the different economic system.
Main Body
Business economics is the applied economic which analyse the financial and market
related and environmental issues of the businesses face. There are certain concept that are
covered in the given business economics that includes the concept of scarcity, product factors,
consumption and distribution. Being a manager, the main goal of the manager is to establishes
and maintain the team by which they can rightly attains the overall goal of the company. The
team member must integrated with the certain set of skills and abilities which are linked to the
economics along with the management & leadership qualities. Economics play the signifiant role
and due to it the manager are able to understand the macroeconomics patterns and they are
rightly able to monitor the constant change in the overall working.
It basically helps in giving trade advice to the manager by which the monetary policies
are being formulated and established. Additionally, manager are bale to conduct the economy
analysis of their rivals which are sustaining in the market. Scarcity is defined as the finite nature
of the resources, also the availability of them. This basically shows that people are having more
wants and resources that are limited for the society and the individual. Choice is the factor in
which the individual select the product which is being like by them among the variety of options
which are available in the respective market. When taking the consideration of companies, Aston
Martin, choice is defined as the ability of the producer or the customer in order to choose the
products or resources with the aim of buy them and also offer from variety of possibilities.
Business economics is the study of the business and the certain variable which are leading to
have the diversity in the business structures and the connection with the sole aim of labour,
capital, product market with the help of using economic tools and certain theoretical ideas. This

respective phrase is being in different ways that includes variation in the economy which is
having the major impact on the overall decision-making of the getting more customer,
opportunities, experiencing and tremendous with the aim of expanding their business to increase
its profits.
Business economics is the concept in context to the discipline aid in the strategic
thinking and the certain logical decision-making by which they can ensure huge profitability.
This is basically related to the entire decision-making process which leads to create & help the
individual to studying certain elements which are directly impacting the entire functioning,,
success and management of the company. These are the basic consideration which is leading to
have the production, distribution and the overall consumption in the business and also take better
decision in the market. In context to economics, scarcity is the disparity among the total
availability of the certain resources and requirement of theoretical aspects and the choices of the
people who are retailing in the business for long period of time by which they can rightly ensures
the better working(Barber, 2021). In context to Aston Martin, the scarcity has the potential to
the limited customer options that are having huge impact in the entire economy.
Possibility of Production a frontier is the certain concept which states that the factors of
production are limited. In order to analyse in different manner, it is the visual depiction also the
economic model of better production and the balance among the two items with the finite
resources. On the same hand, opportunity cost is defined as the prices or the cost for the best
choice by the company, individual or the investors. It also helps in giving clear guidance and
direction which is related to the decision-making so that they can create and it also vital for them
to have investment-based judgement which is significant to the idea of the company such as
Aston Martin. In economic system, opportunity cost in important in various aspects as it helps in
the free market economy since this basically helps in choosing feasible alternatives in the sorts of
possible outcomes. On the same side, opportunity cost is vital in the mixed economy system as it
basically helps the people and the venture to make the best use of their resources by which they
can better maximise the economics earnings.
External environment in business refers to the total of all the external factors which are
influencing the overall decision-making and their working. It is important for the manager of
the company to analyse how the changes in the macro environment as its affect on the
corporation. PEST Analysis is being used in context to the Aston Martin in order to analyse how

the external business environment influencing the overall decision-making. This respective
framework is being in the strategic environment wand they are scanning the section. In context to
Aston Martin and it tell the managers and the strategies in which their market is now and jre they
would be heading in the near future. There are various factors of PEST analysis in context to
Aston Martin are given below:
Political: It is being known that the political climate of UK is being handled by analysing
the level of government interference in the various business activities. As the general political
stability are the certain type of legislations which is being used to implement the having the
negative influence on Aston Martin overall decision-making and organisational behaviour.
Economical: As the people who are resident in the UK are having the major market-
oriented that means that the prices are being fixed by the forces of demand and supply with the
aim of having distribution and the investment to the consumers. In relation to Aston Martin, this
is one of the economic aspects which is influencing the overall firm and its behaviour which is
having unemployment rates which make difficult for the business manager to take the hiring
decision in an appropriate manner. Tax rates is the another major issue which impact the overall
decision-making of the company. Rise in the tax rates means that employees are completely
compelled to pay more tax on their earning so this mean consumer is have less money to spend
for purchasing the goods and services. In context to Aston Martin, there is the negative influence
on the entire decision-making of the firm and the organisational behaviour since it expects to
earn less sales in the target market.
Social: In UK, it is being associated that the social aspects by which people data is
critical for making the various business decisions. As the Aston Martin is cope up with the
various business decisions with the varying demands, interest & choice of various generations
and all of which the required different approaches can offer the many offers(Trinugroho and Lau,
2019).
Technical: It is the technological aspects in United Kingdom is continuously rising as
they are giving the chances & advantages within the Aston Martin, As the new technologies such
as artificial intelligence, search engine optimization, other similarities and chatbots. For example,
they are having an major influence on corporate and the overall behaviour by generating new
market for businesses.

Variation in the external environment is having major impact on the overall decision-
making of the firm and it is being analysed as per the preceding arguments the state of the
economy which is having major influence on the overall decisions of the business and the
workplace. In context to Aston Martin, certain decisions and the certain amount of individual
which is being employed by the company and the certain degree of interest and influence as the
decision-making by the establishment's management.
As the idea of market, according to the Barber(2021), is the made up of institutions,
processes, procedure, infrastructure and social connections in such various parties participate in
the global trade. As the marketing operations are being claimed to run the overall marketing
programme, also the yearly strategy planning and campaign planning methods. Market & its
operations serve as the backbone of the marketing functions, governance and the full support in
the company as they are helping the company which is basically related to the overall working of
the company. In economics, demand and supply is defined as the connection among the goods
which are being manufactured so that they can sell at various prices and the quantity at which the
buyer is choosing.
In context to business, equilibrium is being referred as the balance of demand and supply
components. As the prices are likely to revert to equilibrium in context to the Aston Martin
unless the particular demand & supply characteristics alter.

As the manner is which certain sectors are referred and which is differentiated based on
the kind and the degree for the business products is called as the market structure. As the perfect
competition, it is integrated with large number of buyer and seller who are operating their
business, there is full freedom of entry and exit of the firms, the standardisation of industrial
output and the absence of the any venture is the major market share(Baker, Kumar and Pandey,
2021). Monopolistic market is the type of market in which differentiated products is being
offered and there is full freedom for entry and exit of firms. This is being seen with the help of
graphic that the rising cost is still more supplier then the demand which leads to results in
minimum sale in the market. In context to Aston Martin, when the equilibrium is reached as the
quantity of goods is being delivered in equal to the overall quality of the goods offered. As the
prices are at the point of equilibrium then the quantity demanded is higher than the quantity
supplied.
Market operations are vital in the firm such as Aston Mart8n as it helps in the analysing
the long term goal of the company, given proper monitoring so that they can track the company
and ensuring the effective investment returns. Furthermore, measures for stabilising government
securities market, complexity in execution and the contractions in the open market.

CONCLUSION
From the above essay, it is being concluded that business economic helps in the overall
development of the relationship among different economic factors that are income level, market
structure and many more, scarcity occurs when the given demand for products exceeds the
supply in the market, it limit the options which are accessible to customers and hence the
economy in the global market. Furthermore, the concept of opportunity cost defined as the
expense of foregoing a certain available opportunity. Market structure is vital as it has an
influence on market which leads to impact the motivation, decisions and the opportunities
accessed by the participants in the market.

REFERENCES
Books and Journals
Baker, H.K., Kumar, S. and Pandey, N., 2021. Thirty years of Small Business Economics: A
bibliometric overview. Small Business Economics, 56(1), pp.487-517.
Trinugroho, I. and Lau, E. eds., 2019. Business Innovation and Development in Emerging
Economies: Proceedings of the 5th Sebelas Maret International Conference on
Business, Economics and Social Sciences (SMICBES 2018), July 17-19, 2018, Bali,
Indonesia. CRC Press.
Grégoire, D.A. and Cherchem, N., 2020. A structured literature review and suggestions for future
effectuation research. Small Business Economics, 54(3), pp.621-639.
Nakara, W.A., Messeghem, K. and Ramaroson, A., 2021. Innovation and entrepreneurship in a
context of poverty: a multilevel approach. Small Business Economics, 56(4), pp.1601-
1617.
Barber, B., 2021. The absolutization of the market: Some notes on how we got from there to
here. In Constructing the Social System (pp. 217-234). Routledge.
Devine, P.J., Lee, N., Jones, R.M. and Tyson, W.J., 2018. An introduction to industrial
economics. Routledge.
Hauser, A., Eggers, F. and Güldenberg, S., 2020. Strategic decision-making in SMEs:
effectuation, causation, and the absence of strategy. Small Business Economics, 54(3),
pp.775-790.
Stage, S., 2018. 1. Ellen Richards and the Social Significance of the Home Economics
Movement. In Rethinking home economics (pp. 17-33). Cornell University Press.
Online
Supply and Demand. 2022. [Online]. Available through: <
https://www.intelligenteconomist.com/supply-and-demand/>