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Business Economics 1

  • Date Submitted: 12/09/2013 03:34 PM
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Business economics – Chapter one

1.1 consumers and manufacturers
manufacturing companies are there to manufacture goods and services, witch are then sold on to the consumer. The consumer in has the requisite purchasing power as he is employed by a manufacturing company. Economics is concerned with mans quest for ‘prosperity’: How can goods and services be offered as efficiently as possible, i.e. using as few resources as possible.
Economics: concerned with consumer-manufacturer and manufacturer-manufacturer relationships. A distinction between Micro-economics(: analyze market forms: ex. world travel market) and Macro-economics(: economic problems that affect society as a whole: inflation, unemployment).
Financial management: economic activities within a production organization. Production is not only physical goods, also trade and provision of services. The economic system assigns an important role to production in businesses.
A business can be defined as: an economic unit that aims to sell goods and services to customers at prices that will provide an adequate return to its owners. / businesses are production organizations that are specifically geared towards generating income in the marketplace, they strive to profit.

A production organization combines production resources and transforms them into end products (production process). Operates between two markets: production resources are acquired in the procurement market, and the manufactured goods are sold in the sales market.
Production resources consist of raw materials/ natural resources (current assets) and materials that last longer than raw materials (fixed assets) like buildings and machines.
Assets are economic resources. Everything that is held to have positive economic value.

Procurement market: raw materials(current assets)
Fixed assets
Labour (See figure 1.1 in book)

Businesses strive to create value. The net proceeds from the sale of the manufactured goods or...

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