Principles of Business

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 The Development of Economic Activity
Human Beings produce and consume goods and services from the resources in their environment. It is primarily for the reason that humans are called ECONOMIC ANIMAL, because he or she has the ability to use his or her hands and brain to satisfy his or her immediate personal needs. These are looked at as basic needs; these needs are food, shelter and clothing (Economic Activity). Economic Activity means activities which results in the satisfaction of needs. In order to satisfy these needs, man engaged in certain economic activity such as farming, fishing, hunting, trade form, women stay home. Direct Production/ Direct Satisfaction of Wants

Direct Production really means that human beings provide all their needs for themselves and their family without the aid of others; in other words, they do not depend on others to provide. Indirect Production/ Indirect Satisfaction of Wants

Indirect Production means that human beings exchange their surplus by barter with others; in other words, human beings depend on others to do things for them                         Subsistence Economy

Subsistence Economy – An economy which provide just enough to survive, but not to improve their way of life. BARTER SYSTEM
 Barter System is the exchange of goods or services for other goods and services without the use of money. ADVANTAGE OF BARTER SYSTEM
* It allowed people to dispose of any surplus, they had at the same time obtain a variety of things they needed. * It enables persons to enjoy goods and services they could not produce. * Countries with foreign currency problems can get goods and services that they require. * Countries that engage in trade can strengthen their political and cultural ties. DISADVANTAGE OF BARTER SYSTEM

* Double or co-incidence of wants – No trade can take place unless there is double or co-incidence of wants; that is your trading partner has what you want and wants what you have. * Time Consumption – It could be challenging to find willing partners. * Spoilage – If an individual failed to find a suitable partner within a reasonable time ones wealth in goods could be destroyed. * Unequal Exchange - There is the difficulty or unequal exchange where the values of some goods far outweigh the value of other goods. MONEY

Money is any commodity that is generally acceptable and is used as a medium of exchange and as a measure of value CHARACTERISTICS OF MONEY
* Acceptability – It must be readily acceptable by everyone * Durability – It should not wear out easily
* Homogeneity – it features should be identical
* Divisibility - Money should be able to be broken down into smaller units. * Portability – It should be easy to carry around.
FUNCTIONS OF MONEY
* Medium of Exchange – Money makes the exchange of goods easier * Measure of Value – Money can be used to state prices of goods * Store of Value -  Money can be saved
* Deferred Payment – Money can be earned at one time and spent at another. DIVISION OF LABOUR OR SPECIALIZATION
Division of labour is sharing the work. The work is divided among persons and they specialize in doing their part of the process, specialization comes as a part of this. DIVISION OF LABOUR BY PRODUCT

Division of labour by product means people can do what they can do best in exchange for money and then using the money earned to buy the goods and services of others. DIVISION OF LABOUR BY PROCESS

Division of labour by process means by organizing production into many stages workers become more specialized in their work and consequently they produce more. ADVANTAGES OF DIVISION OF LABOUR OR SPECIALIZATION

* Workers become more expert in their jobs
* Jobs become simpler and easier to learn
* Output per person increases
* Machinery and automation can be used
* Workers can more easily change jobs
* Unit cost are reduced
DISADVANTAGES OF DIVISION OF LABOUR OR SPECIALIZATION
* Work can...
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