I hear these terms used all the time but I’ve never really known what they specifically mean.
In: 6
Economics : The study of human behavior concerning the production, distribution and consumption of goods and services. Or in simpler terms, how groups of human interact with goods and services
Finance : Management of money
Commerce : trading goods and services
Business : the administration of an organization engaged in commercial, industrial or professional activities. AKA how to run a company.
TL;DR you want to start a lemonade stand.
You contact your local chamber of commerce for guidance on starting your business. To decide how much to charge per cup, you ask an economist. To decide how much to borrow from your mom to get started, you ask a financier.
Economics = study of how “value” (goods, services, debt, money, etc.) circulates through a society in markets according to patterns like supply and demand. Big focus on incentives and what determines the price/availability of things.
Finance = how organizations use assets and instruments like money, debt, bonds, stocks, etc. to run their business and make it more valuable. Does a company keep a lot of cash on hand in a bank account? Do they raise capital by issuing stock to investors? Do they borrow money? Do they hold foreign currency to protect against exchange rate changes? What is their cash flow (revenue vs spend)? How much of their money is coming from revenue vs. these other means, and is that optimal for their goals?
Commerce = people doing business with each other. It’s just a generic term for trade, but we tend to use it more formally.
Business is also a very broad term that refers to any activity where people are buying/selling stuff.
Latest Answers