The Purpose of Business Activity
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Need: A good or service essential for living.
Want: A good or service which people would like to have, but not essential for living.
The Economic Problem: An individual has unlimited wants but we have limited resources.
UNLIMITED WANTS + LIMITED RESOURCES = SCARCITY Factors of Production:-
- Land.
- Labour.
- Capital.
- Enterprise.
- Land: The natural resources provided by nature.
- Labour: The Human efforts put in a business for the manufacture of a product.
- Capital: Any amount, machinery, other equipment invested in the business by the owner is called capital.
- Enterprise: People who undertake the risks of business activity are called entrepreneurs/enterprise.
Oppurtunity cost:-
The next best alternative given up by choosing another item. Opportunity cost is the choice which is given up for another choice. It is when resources are scarce.
Economies of Scale:-
Average cost of production goes down as we produce more. We can buy Machinery now in which we can't buy later. (TECHNICAL ECONOMIES OF SCALE).
Specialisation[Division of Labour]:-
When the production process is split up into different tasks and each worker performs one of these tasks. Specialization brings in efficiency in the business and a greater economic output.
Advantages
- Economic Output increases
- Saves time
- Each worker does a specialized task
- Skilled and experienced
- You can buy specialized machinery, and benefit from the economies of scale.
Disadvantages
- Bored of doing same job over and over again; lower job satisfaction
- Relying on other producers
- Workers become skilled in one task only
- Workers become unskilled in other tasks
- Unemployment
Business Objectives:-
- To make profit
- Business (GROWTH) in size
- Survival
- Providing a service
Groups involved in Business Activity
- Owners:These
are people who invest the money and take risks and they expect to make
profit. They will pay for any losses done by the business.
- Directors/Managers:They
are employed to manage, control, delicate, plan, and make decisions.
Wrong decisions made by the directors can make a business suffer from
losses.
- Workers:Are employed for a wage or a salary to do a particular job. They have contracts.
- Consumers:They buy the products a business makes but they are the most important people.
- Government:They want taxes and make laws that affect everybody concerned with the business.
- The Whole Community:They want safe products, jobs, and a clean environment (unpolluted)
- Owners:These
are people who invest the money and take risks and they expect to make
profit. They will pay for any losses done by the business.
About the Author
by: Admin
Total views: 2854
Word Count: 759
Date: Sat, 13 May 2006 Time: 12:00 AM
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