Table of Contents
THE NATURE OF RESOURCE COST STRUCTURE AND THE PRACTICAL SIGNIFICANCE OF DIFFERENT COSTS 2.2
THE FACTORS INFLUENCING OPTIMUM SIZE AND THE SIGNIFICANCE OF DEMAND AND SUPPLY RELATIONSHIPS 2.3
UNDERSTANDING OF THE RELEVANCE AND LIMITATIONS OF ECONOMIC THEORY TO MANAGE DECISIONS 3.
From the economic perspective, there are a full range of wants from individuals, firms and government but there is only a few number of resources or factors of production such as land, labour, capital and enterprise. The raw material will come from land, taking the example of oil, gas. The labour relates to the individuals able to work. The capital covers machinery, computers, offices or shops for retail people. Enterprise will bring all of these factors together and allow them to produce goods and services in order to make a profit. This individual report will be identifying the nature of resource cost structure and the practical significance of different cost. It will also explain the factors influencing optimum size and the significance of demand and supply relationships. It will finally demonstrate an understanding of the relevance and limitations of economic theory to management decisions. 2.
2.1 ECONOMIC PERSPECTIVE IN ORDER TO RUN THE COMPANY EFFICIENTLY: Considering an example of project of creation of a manufacturing company based in the UK, the resources needed for the realisation of the project will be established before the start of the project. Knowing that any resource has a cost associate with it, identifying the resources needed, will lead to work towards establishing all costs for the whole project. Resource can be physical or virtual, but the report will be interested in the physical resources as skills are manifested in people, who are physical entities. Three types of resources have to be considered: People, materials and equipment. People can be skilled,...
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