Introduction to subject :There was time when business units (shops, firms, factories, mills etc.

) were set up, owned and managed by individuals or business families. Big industries were few and scale of business operation was relatively small. The managerial skills acquired through traditional family training and experience were sufficient to manage small and medium scale business. So there was no any crucial problem of decision making. For ex: son of grower does not need to study BBA. Farmers son does not need to learn how to plough. But nowadays the industrial business world has changed in size, nature and content some factors make business world more complex. Like the growth of larger scale industries, growth of large variety of industries, diversification of industrial products, expansion and diversification of business activities of corporate firms, Growth of multinational corporations, mergers and take over etc. These factors have contributed a great deal to rivalry, competition, risk and uncertainty. Here the family training and experience is no longer sufficient to meet the managerial challenges. Here, business decision making is the helpful tool in such type of business environment. To solve the complexity of business, decision making has inevitably increased the application of economic concepts, theories

and tools of economic analysis. The application of economic concept, theories logic and analytical tools in the prediction of market conditions has proved to be a great help in business decision making. The economic theories and analytical tools, which are widely used in business decision making crystallized into a separate branch of management studies. This branch is called managerial economics or business economics. Meaning of Business Economics : The worldly meaning of ME or BE is related to manager. In simple meaning a branch of economics which is related to manager or management is M.E. Manager has to take certain decisions in business like assessment of investible funds, selecting business area, choice of product, determining optimum output, determining price of the product, determining input, combination and technology and sales promotion. Here he applies various economic concepts and theories with help of quantitative methods like mathematical tools, statistical tools and econometrics.

The branch which helps to apply these concept in business world is Business economics. The application of economic concepts and theories in combination with quantitative methods is shown in figure. :

Managerial decision areas Assessment of investible funds Selecting business areas Choice of product Determining optimum output Determining price of the product Determining input combind and technology Sales promotion