The study of how society allocates limited resources to manufacture or acquire goods and services is known as economics. A business economist will look at how corporations and consumers make supply and demand decisions. This can include decisions that have an impact on production, pricing, and profit margins.
The majority of professional economists will hold a master’s degree. This could include a master’s or doctoral degree in economics. With a bachelor’s degree in economics, you might be able to find some entry-level jobs with private companies, such as supply or demand analyst positions.
Microeconomic theory is at the heart of business economics. Microeconomics is the study of the various factors that influence people’s and businesses’ behavior. Microeconomics is more concerned with the various factors that influence supply and demand than macroeconomics, which focuses on the entire economy.
Business economists assist companies in determining how much of a product to produce. At all times, the goal is to maximize profit. Producing too much of a good can result in a market surplus, resulting in lower prices and, as a result, lower profits over time. Insufficient production can keep a company out of a growing market and reduce profit potential.
Several factors can influence how much of a product is produced. Two of the factors are the current cost of raw materials and the current or projected demand of consumers. To aid in the analysis of current market trends, a business economist will use a variety of economic statistics, such as trends in raw material prices.
A business economist’s other priority is to figure out how to price various goods and services. Pricing a product or service competitively ensures that a company stays competitive in the marketplace. To make a profit, the price must at least be higher than the company’s cost of producing or supplying the good or service.
When pricing a product or service, business economists consider a number of additional factors. The consumer price index (CPI), for example, measures how much a person is willing to spend on a specific set of goods. A business economist can make decisions about increasing or decreasing the current price of a good or service analyzing CPI trends.
A business economist is responsible for ensuring the company’s profitability. Keeping an eye on the overall market situation is also important when making important decisions. This includes keeping track of market expansion and contraction, as well as researching emerging markets. Negotiating with suppliers for lower prices, which is common with bulk purchases, and taking advantage of discount periods may also be a part of the job.