O Level Commerce Notes Mahin

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The Commercial World Chapter 1
What is commerce?
Commerce is study related to distribution of products from the producer (point of production) to the consumer (point of consumption). Products, Production, Producer and Consumers
Products are the goods and services produced by a company, to satisfy needs and wants of customers. Production is any activity which serves to satisfy human needs and wants. Producer is a person or company who produces products to satisfy need and wants. Consumers are the ultimate users of goods and services produced. Creation of Utility

Utility of form: Any activity that changes the form of a product so that it becomes more useful to the consumer for example conversion of wood into more useful furniture. Utility of place: Any activity that transfers the goods or services to a location which is within easier assess to the consumer, for example transfer of goods from far off factories to nearby retail shops. Utility of time: Any activity that causes the availability of a product on time when it is needed, for example availability of wheat throughout the year. Needs and Wants

Needs are the things necessary for living, that is food, shelter and clothing. Wants are those goods and services which are not compulsory for living but makes life easier. Division of Labour
Division of Labour is breaking down of a productive activity into simpler tasks so that a person specialist in that task can perform it. Advantages of Division of Labour
• Concentration on work increases.
• Increased output per worker.
• Mechanization can occur.
• Economy of scale can be achieved (low average cost of product). • Less time consuming.
• Better quality of products.
• Mass production.
• Saving of tools and equipment
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