Business activity: understanding the basis of economics
Good day fellow business members in today's episode on my blog u would be discussing a very important topic, economics and how it is important for the growth and development of any business.
What is economics
Economics is a social science, like all social sciences studies human behaviour through the use of scientific method.
Like all social science science it is particularly difficulty to get an exact definition as often times different scholars come about with a new definition in relation to a specific area or human activity relating to the general subject.
The most widely recognised definition of economics was profounded by professor Lionel Robins which states that economics is a social sciences which studies human behaviours as a relationship between ends and scarce means which have alternative uses
Key component of his definition are.
Social sciences : this is a science which studies human interaction within them selves and thier immediate environment.
Ends : this are the wants in which individuals desires , all individuals have wants they wish to satisfy. What is important to note is that human wants varies according to individuals.
Scarce means : the resources available for the satisfaction of human wants are greatly limited.
Alternative uses : this implies opportunity cost, that is the cost for which the individual has forgone which he now used in buying the goods he used in satisfying his want.
What economics is all about
The study of economics came about as a result of humans wants being unlimited and resources to satisfy the wants are limited hence individuals are being forced to make calculated decisions to forgo the less attractive options, it is this process of allocating scarce resources that forms of economics.
Economics as a field is studies is most essential in the allocation of financial resources to statisfy humans wants.
To this end it is usually idea for the president of any county to have at least a general knowledge of economics for efficient management.
How economics relates to our modern day life.
Everyone today have wants which they wish to satisfy, this wants are so much that individuals are often faced with a dilemma as to how to satisfy this want.
The aspect of wants Is not peculiar to only individuals it is also something that can be found in business as businesses must go through a tough time when managing resources.
A fast food business has three alternative and they are as follows.
Plan a open a new location so as to attract more customers and Increase sales.
Plan b fix the current location so as to make the location more conducive for business and make customers happy thereby increasing sales.
Plan c get new motor vehicles to Increase delivery and reduce waiting time
With only enough resources for one project how can a business solve this
Economical statement of problem
From the above we can see that all ideas are good and could be really profitable for the business.
Every business would like to open a new location buy new equipments and renovate the current location, but due to scarce resources this business does not have the available resources to pursue all projects.
Hence the business is faced with an economic problem as it's wants (plan a , b and c) cannot both be accomplished due to lack of funds (scarce resources) the business must then pick one over the next(alternative uses)
Without economics the process of picking would be chaotic as it becomes difficult to pick which alternative would produce the highest return.
Source
To solve this problem economics introduces what we know as scale of preference this would help the business better understand which would be better off option to go for.
Scale of preference
This is the systematic arrangement of the wants of an individual or business in order of preference form the highest to the least pressing.
By arranging the wants in order of preference the business would then have a better idea of which to solve first, scarce resources are then allocated to those at the top going doing down as the top are those whivh require immediate attention.
An example of a table of preference
| Priority | want |
|---|---|
| 1 | get a new car |
| 2 | renovation of current location |
| 3 | rent a new location |
This would be an idea table of preference due to the fact that it is logical for any business to first develop its current location before it branches out , as without a solid base the business will crumble.
But this being said this is clearly hypothetical.
Conclusion
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Source
With all I have said above I hope we have learn a bit economics and how we can identify this problems and equally tackle them using scale of preference.
| Business: | Business Activities : Understanding the basics of economics |
|---|---|
| Username: | @victoh78 |
| Owner's name: | victoh |
| location: | gwarimpa, abuja, Nigeria. |
| About Us: | Iink |
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For us as business owners to learn the basics of economics and how to make this business and any other work is to do a lot of planning, planning, wrapped up in too much for the business to stay. Your post helps us.
Knowing how to manage the economic part of a business is of vital importance for its growth, it has not shown a good plan, which we can execute without a doubt.
Thanks for your information, cheers!
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Excellent Post with great educational content🤝🏼
Thank you very much