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Which of the following is an external or environmental issue addressed through Macroeconomics in the scope of Business Economics?
AChoice of least-cost input mix
BStage of the business cycle
COptimum level of inventory to hold
DPricing policy of the firm's product
Answer & Solution
Correct answer: B. Stage of the business cycle
1. Environmental issues lie outside the firm's control and use Macroeconomics.
2. The stage of the business cycle is such a macro environmental factor.
3. Choice of least-cost input mix is an internal operational issue under Micro Economics, so it is eliminated.
4. Optimum inventory level and product pricing policy are likewise internal operational issues, ruling them out.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 1 Unit I "Nature and Scope of Business Economics", p.8_
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