Hanilen G. Catama BSCoE 3 The General Economic Environment.
June 20, 2013
1. Consumer and Producer Goods and Services - The goods and services that are produced and utilized may be divided conveniently with two classes: a. Consumer goods and services - Those products or services that are directly used by people to satisfy their wants. Food, clothing, homes, cars, televisions, haircuts, opera and medical services are examples. b. Producer goods and services - Used to produce consumer goods and services or other producer goods. Machine tools, factory buildings, buses, and farm machinery are examples. 2. Measures of Economic Worth - Goods and services are produced and desired because directly or indirectly they have utility the power to satisfy human wants and needs. Utility is the most common measured in terms of value, expressed in some medium of exchange as the price4 must be paid to obtain the particular item. 3. Necessities, Luxuries, and Price Demand - Goods and services may be divided into two types: necessities and luxuries. Obviously, these terms are related, because, for most goods and services, what one person considers a necessity may be considered a luxury by another. 4. Competition - Because economic laws are general statements regarding the interaction of people and wealth, they are affected by the economic environment in which people and wealth exist. Most general economic principles are stated for situations in which perfect competition exists. 5. The Total Revenue Function - The total revenue (TR) that will result from a business venture during a given period in the product of selling price unit, p, and the number of unit sold, D. thus, TR price x demand = p. D. (2-3)
Present Economy Studies RULE 1 When revenues and other economic benefits are present and vary among alternatives, choose the alternative that maximizes overall profitability based on the number of defect free units of a product or service produced. RULE 2 When revenues and other economic benefits are not present ar are constant among all alternatives, consider only the costs and select the alternative that minimizes total cost per defect free unit of products or services output. 1. Total Cost in Material Selection - In many cases, economic selection among materials cannot be based solely on the costs of materials. Frequently, a change in materials will affect the design and processing costs, and shipping costs may also be altered. 2. Alternative Machine Speeds - Machines can frequently be operated at various speeds, resulting in different rates of product output. However, this usually results in different frequencies of machine downtown to permit servicing or maintaining the machines, such as re-sharpening or adjusting tooling. 3. Making versus Purchasing (Outsourcing) Studies - In short run, say, one year or less, a company may be consider producing an item inhouse even though the item can be purchased from a supplier at the price lower than the companys standard production costs. 4. Trade-Offs in Energy Efficiency Studies - Energy affects the annual expense of operating n electrical device such as a pump or motor. Typically, a more energy device requires a higher capital investment than does a less energy-efficient device, hut the extra capital, investment usually produces annual savings in electrical power expenses relative to a second pump or motor that is less energy efficient.
GALVAN, MICHELLE JEAN G. BSCoE 3 THE GENERAL ECONOMIC ENVIRONMENT
June 20, 2013
1. Consumer and Producer Goods and Services - The goods and services that are produced and utilized may be divided conveniently with two classes: c. Consumer goods and services - Those products or services that are directly used by people to satisfy their wants. Food, clothing, homes, cars, televisions, haircuts, opera and medical services are examples. d. Producer goods and services - Used to produce consumer goods and services or other producer goods. Machine tools, factory buildings, buses, and farm machinery are examples. 2. Measures of Economic Worth - Goods and services are produced and desired because directly or indirectly they have utility the power to satisfy human wants and needs. Utility is the most common measured in terms of value, expressed in some medium of exchange as the price4 must be paid to obtain the particular item. 3. Necessities, Luxuries, and Price Demand - Goods and services may be divided into two types: necessities and luxuries. Obviously, these terms are related, because, for most goods and services, what one person considers a necessity may be considered a luxury by another. 4. Competition - Because economic laws are general statements regarding the interaction of people and wealth, they are affected by the economic environment in which people and wealth exist. Most general economic principles are stated for situations in which perfect competition exists. 5. The Total Revenue Function - The total revenue (TR) that will result from a business venture during a given period in the product of selling price unit, p, and the number of unit sold, D. thus, TR price x demand = p. D. (2-3)
PRESENT ECONOMY STUDIES RULE 1 When revenues and other economic benefits are present and vary among alternatives, choose the alternative that maximizes overall profitability based on the number of defect free units of a product or service produced. RULE 2 When revenues and other economic benefits are not present ar are constant among all alternatives, consider only the costs and select the alternative that minimizes total cost per defect free unit of products or services output. 1. Total Cost in Material Selection - In many cases, economic selection among materials cannot be based solely on the costs of materials. Frequently, a change in materials will affect the design and processing costs, and shipping costs may also be altered. 2. Alternative Machine Speeds - Machines can frequently be operated at various speeds, resulting in different rates of product output. However, this usually results in different frequencies of machine downtown to permit servicing or maintaining the machines, such as re-sharpening or adjusting tooling. 3. Making versus Purchasing (Outsourcing) Studies - In short run, say, one year or less, a company may be consider producing an item inhouse even though the item can be purchased from a supplier at the price lower than the companys standard production costs. 4. Trade-Offs in Energy Efficiency Studies - Energy affects the annual expense of operating n electrical device such as a pump or motor. Typically, a more energy device requires a higher capital investment than does a less energy-efficient device, hut the extra capital, investment usually produces annual savings in electrical power expenses relative to a second pump or motor that is less energy efficient.
