CHAPTER 1. THE FIRM’S ECONOMIC ACTIVITY
1.
ECONOMIC ACTIVITY AND FINANCIAL INFORMATION
Economics is the science that studies the distribution of scant resources among alternative uses to satisfy human needs in the most efficient way possible, i.e. in such a way that a given amount of resources produces the maximum satisfaction or utility possible. Economic activity, therefore, can be defined as the set of conscious acts that humans carry out in order to satisfy their needs using limited means or resources in accordance with the economic principle of maximum advantage or optimum utilisation. Economic goods are the object of economic activity and they are characterised by being suitable to satisfy human needs directly or indirectly and by being insufficient or lacking in relation to the desire felt for them. Two different types of economic activity can be clearly differentiated: - Economic activities of production: activities intended to produce economic goods (goods and services). The resources used in the production of said goods and services are termed productive factors. - Economic activities of consumption: the use that is made of the economic goods (goods and services) produced to satisfy needs. At present production activities are undertaken by the economic units of production or firms, while activities of consumption are carried out by the economic units of consumption (families in the main). The firm is, therefore, the economic unit responsible for production activities and its mission is to produce goods and services for consumption by combining certain resources or productive factors (persons and economic goods). There follows a brief review of the historical development of economic activity. This is intended to allow a better understanding of how the current situation has come about, with an economy based on exchanges of goods and services in the market and on the importance of money as the instrument that facilitates these exchanges. Humans... [continues]
1.
ECONOMIC ACTIVITY AND FINANCIAL INFORMATION
Economics is the science that studies the distribution of scant resources among alternative uses to satisfy human needs in the most efficient way possible, i.e. in such a way that a given amount of resources produces the maximum satisfaction or utility possible. Economic activity, therefore, can be defined as the set of conscious acts that humans carry out in order to satisfy their needs using limited means or resources in accordance with the economic principle of maximum advantage or optimum utilisation. Economic goods are the object of economic activity and they are characterised by being suitable to satisfy human needs directly or indirectly and by being insufficient or lacking in relation to the desire felt for them. Two different types of economic activity can be clearly differentiated: - Economic activities of production: activities intended to produce economic goods (goods and services). The resources used in the production of said goods and services are termed productive factors. - Economic activities of consumption: the use that is made of the economic goods (goods and services) produced to satisfy needs. At present production activities are undertaken by the economic units of production or firms, while activities of consumption are carried out by the economic units of consumption (families in the main). The firm is, therefore, the economic unit responsible for production activities and its mission is to produce goods and services for consumption by combining certain resources or productive factors (persons and economic goods). There follows a brief review of the historical development of economic activity. This is intended to allow a better understanding of how the current situation has come about, with an economy based on exchanges of goods and services in the market and on the importance of money as the instrument that facilitates these exchanges. Humans... [continues]
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