Business (managerial) economics is essentially micro in character but pragmatic and problem-solving in outlook — it uses economic theory to take real managerial decisions, so it is applied and practical rather than abstract theory for its own sake. It is normative (it prescribes what a firm should do), it is both a science and an art, and it freely borrows macro tools (national income, business cycles) to read the firm's envir …

Step 1 — Recall the accepted nature of business economics

Business economics (managerial economics) integrates economic theory with business practice to help managers take rational decisions. Its recognised features are:

• Micro in character — it focuses mainly on the individual firm/industry.
• Pragmatic / realistic — it deals with practical problems as they are, not idealised abstractions.
• Normative — it prescribes what ought to be done to reach an objective (e.g. maximise profit).
• Both a science and an art — a body of systematic knowledge that must also be applied skilfully.
• Uses macro analysis — it draws on macro variables (business cycles, national income, policy) to understand the firm's environment.

Step 2 — Test each option

• (A) Normative — TRUE, it prescribes goal-directed action.
• (B) "Abstract and purely theoretical" — FALSE; business economics is deliberately practical and decision-oriented.
• (C) It is an art — TRUE, it is a science as well as an art. …