Knowledge on economics is significant in our daily lives. Albeit the same will not teach us the formula on how to become rich, however it can explain why an entrepreneur and his enterprise became successful. Also it can provide explanations why there are number of businesses in the country accustom to bankruptcy.
For example, foreign investors are likely to invest in one country having a higher percentage of Gross Domestic Product (GDP). Even local businessmen will likely to invest or establish an enterprise in one place of a locality only if they found out based on economic data that there are increase in domestic consumptions thereof. Increase in consumption is an implication that the people residing in that locality have an income to buy for their needs and wants. If they have an income then economically they have their source of income. Their source of income could be out from their employment. Or it could be that they have their own small enterprise. If these could be the situation then there are business opportunities.
Through the study of economics, one could figure out why the prices of oil and petroleum fluctuates from time to time; why banks’ and other financial institutions’ offer are related; and why increase in interest rates are associated with the inflation. Knowledge on economics can answer these situations and can explain the surrounding circumstances affecting the environment.
Truly, knowledge on economics are vital in business. Decisions made by businessmen or entrepreneurs should base significantly on economic activities, domestic and international, in order to arrive in the increase of their revenues or expand their business in other areas. The management of the company who can understand the cause and effect of economic growth can make right decisions on problems, issues and matters affecting the business operations.
For customers, knowledge in economics are helpful in deciding what products to buy for the household base on the adopted standards and quality. Moreover, it can help them become aware on their responsibilities and rights as customers. Hence, they can rightfully react if ever there are overpricing of products and services in the market.
Part of the success of business is to be guided by the economic theories and principles, including the foregoing, among others.