Impact of Economy on Business Decision and Market Structure

BUSINESS ECONOMICS

TABLE OF CONTENTS
MAIN BODY.............................................................................................................................3
REFERENCES...........................................................................................................................7

MAIN BODY
Business economics is being defined as the field of economics which is related with
the study of financial, market related, environmental and organizational issues faced by
companies. This is pertaining to the fact that the economics involves all the different aspect
which is involved for the business development and decision of business. The present essay
will outline the fact that how economy affects the business decision and the behavior of the
firms. Along with this the discussion will take place relating to the operations of the market
and how it influences market structure.
Economy is defined as a large set of inter- related activities relating to consumption
and production which aims at optimizing the use of limited resources (Dong and et.al., 2021).
For every country to be successful the most essential aspect is the proper and optimum
utilization of the scarce resources in order to meet the consumption requirement by doing
appropriate production. Every business exists in the economy and for getting successful the
business has to ensure that they are adding for the development of the economy. This is
pertaining to the reason that if the economic development will not be ensured then this will
affect the development of the whole economy.
Hence, all the business exists in the economy itself and if they will not add anything
in the development of the economy and country then it will not be liked by the consumers. As
a result of this, the businesses have to make and plan their operations in such a manner that it
adds in the development of the economy and the society. Also, as the businesses exist in the
economy then they have to make their strategies in direction and as per the regulations
present in the economy. There are many different types of the factor which are present in
economy and affect the operations and profitability of the business. These different economic
factors includes business cycle, inflation, deflation, changes in interest rates, fluctuation in
exchange rates, taxation policy, changes in government bodies and many other related
changes (Kraus and et.al., 2020). All these factors affect business policies and decision
making of different types of businesses operating in economy. Changes in all these factors
affect the business and its policies to a great extent.
For example the interest within the economy has decreased by the banks within the
economy. This simply means that now the people who are taking loan will have to pay less
interest as compared to the previous rates (Wastling, Charnley and Moreno, 2018). Thus, this
major change in the economic factor will affect the working of business and behavior of firm
to a great extent. This reason behind this is that now the companies will get loans and will