the role of business in the economy

ORGANIZATION AND MANAGEMENT© 2016 George Silandote Jr.

The Firm and its Environment

COMPETENCY CODE: ABM_AOM11-Iac-d-7



THE ROLE OF BUSINESS IN THE ECONOMYCOMPETENCY CODE: ABM_AOM11-Iac-d-7



ACTIVITY:With your group, present a pantomime of your usual activities during weekends. Five (5) minutes for preparations, three (3) minutes for presentation.

Rubrics:Clarity : 30%Acting : 30%Content : 40%Total : 100%



What if businesses are not present in the economy?



The Role of Business in the Economy1. Market

- A market is a social arrangement that allows buyers and sellers to discover information and complete voluntary exchanges of goods and services.




- Markets allow you as a consumer to purchase the goods and services that you want. Through markets, information is transmitted between buyers and sellers about:

1) the goods and services desired by consumers, and;

2) the price of those goods and services.




- Markets bring consumers and producers together to coordinate the exchange of resources. Both the buyer and seller must stand to gain from the trade or else the transaction will not occur.




Adam Smith’s “Invisible Hand” Concept- Smith’s Laissez Faire doctrine states that the

market is a free market where the producers and consumers act in accordance to their own interest.

“Give me that which I want, and you shall have that which you want”



The Role of Business in the Economy2. Coordinating Trade and Commerce

- Commerce is an act of trading something of economic value such as a good, service, information, or money between two entities.



The Role of Business in the Economy2. Coordinating Trade and Commerce

- Trade is what increases our standard of living. Instead of having to produce everything that you consume on your own, you are able to trade with others and obtain a higher quality of life.



The Role of Business in the Economy3. Product or Service Specialization

- Businesses bring “specialized” people, equipment, and other resources together and coordinate the production of goods and services.



The Role of Business in the Economy4. Economies of Scale

- When more units of a good or a service can be produces on a larger scale, yet with (on average) less cost input cost, economies of scale are achieved.



The Role of Business in the Economy4. Economies of Scale

- This means that as a business grows and production units increase, a business will have a better chance to decrease its cost.



The Role of Business in the Economy5. Positive and Negative Externalities

- An externality is defined as a benefit or cost that is imposed on a third party, such as society, other than the producer or consumer of a good or service, or, more simply, an economic side effect.



The Role of Business in the Economy



[ end of lesson ]

the role of business in the economy

Education

Transcript of the role of business in the economy