Scarica Understanding Production, Economic Systems, and Economic Indicators e più Sintesi del corso in PDF di Inglese solo su Docsity! Production is the activity of producing, buying, selling and supplying a product or a service in order to earn money. Production is also is the business activity of using resources in order to make goods or provide services: - Goods are physical product, like foods or clothes, - Service, are non-physical product such transports and education, Goods and services are produced to satisfy people’s needs and wants: - Needs are essential for survival, they’re 5 basic needs, which are food, water, housing clothes and warmth, - Wants are things that we want to have but they aren’t essential, The resources used to make goods and providing services are called "factors of production”, which are: - Land, that comprehends all natural resources in a territory, - Labour, it’s human skills and effort, - Capital, are formed by equipment, raw materials and buildings and staff that are used in production’s process, - Enterprise, entrepreneurs who invest money and organise production, A business activity try to earn the maximum quantity of money and it needs to be higher than the cost of production. The difference between cost and selling price in called “Added Value” A business activity can operates in 3 different sectors of production: 1. Primary production consist of industries which acquire raw materials to make other products, 2. Secondary production works on assembly process to transform raw materials into semi- finished or finished products, 3. Tertiary production comprends activity of giving commercial, financial, and personal support and it keeps everything that arrive to the final consumer. A Supply Chain are process “chains” that bring from the extraction of raw materials, to the supply of finished goods or services to the consumer. In that case the sector of production are interdependent because companies from one sector rely on the other sector from many aspect of their activity, like getting raw materials. Deindustrialisation is the process that decrease the importance of industry and manufacturing in the economy and increase the importance of tertiary sector. Deindustrialisation accours for many reason: - The exhaustion of raw materials, - Price competition from other countries, - Relocation of production where the costs of manufacturing are lower, - Technology process, - Investment from other counties, Economic system is a network of organisation used by society to resolve the basic question of what, how, for whole, to produce. There are 3 differ tents types of economic system: 1. Free-market economy, all factory of production are own by private enterprises, and the state’s interaction in the market is limited. It’s based on the law of demand and offerts and private companies decide what, from whom and how produce. ES. USA 2. Command Economy, it’s also called planned economy and the government has the complete control of economy and it keeps all the factory of production. This type of economy is connected with some kind of government, like communism or socialisme. ES. Nord Korea 3. Mixed Economy, is the most common type, and private and public sector coexist. The government control and supply public services. ES. Italy The Public sector of the economy is made up of public corporation set up by the central or local government, to provide goods and services for the public good.they’re involved into area where government has direct responsibility, like defense, health and education. These services are paid by the taxation system corporation purpose is to provide these services for whole the population. Corporations provide also other services of nationals interests, like electricity, water and transport. Advantages of Public corporation: - protection and maintenance of basic industries, - Protection of public interest and welfare, - Lower and stable price for basic industries, Disadvantages of Public corporation - A large size che lead to increased bureaucracy and slow decision-making, - A lack of competition can make the organisations inefficient, - Losses have to be paid by taxations system Over the last 40 years many countries around the word started to privatise some of their public corporations for make them more profitable and efficient. The largest single sale occurred in UK, where investors paid over 12 billion $ for 12 electricity companies Economic Indicators are used to misure the economic development of a country. They are: - GDP, is the total value of goods and services produced by a country in a year. It’s also called GROSS DOMESTIC PRODUCT, - GNP, is the total economic output of a country, regardless production location. It includes GDP+earnings from foreign investments, minus any income earned in the country by foreign residents of business. It’s also called GROSS NATIONAL PRODUCT, - GDP PER CAPITA, is a country GDP, divided by its populations. Economic growth in the annual percentage change in GDP. An increase of economic growth leads to a improvements on life’s standards and on business activity. Government needs to improve their economic growth to have an efficiently use of natural resources, more significant investments in production’s technology and a good quality of workforce. The terme business cycle refers to the cyclical pattern of Economi Growth. The economic growth moves like a pattern and it can be high (Booms. During this period consumer spending is high) or lower (Recession. During this period consumer spending tends to decrease)
