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Economics Economics seeks to understand the functioning of market places. An area of the subject known as microeconomics examines consumers, firms and workers within markets, seeking to understand why prices change for particular products, what influences the costs of firms and in particular what will influence a firm’s of profitability. Economics as a Science Economics is a study of how society decided what, how and for whom to produce. Being a social science that studies the relationship between ends and scarce means which have alternative uses. Macroeconomics The study of how the entire economy works. Examines the whole economy as one very large market. Macroeconomics looks to address how the government might manage the entire economy to deliver stable economic growth. Microeconomics The study of how individuals make economic decisions within an economy. Businesses operate within an economic environment. The revenue they receive from selling a product is determined within a market. In addition to this, the cost that the firm has to pay for its labour, raw materials and equipment are also priced within separate markets. Microeconomics address the various influences at the market level that will impact upon a business’s revenues and costs. Macroeconomics address the issues at a economy level which will similarly effect a business’s revenues and costs. Comprehending, reacting to and possibly even controlling micro and macroeconomic influences on the business are crucial business skills. Factors of production These are grouped into four categories: Land Labour Capital Enterprise Land, labour,capital and enterprise Land. This is where your raw materials come from: oil, gas, base metals and other minerals. Labour. This is the ability of individuals to work. Capital is production machinery, computers, office space or retail shops. Enterprise is the final factor of production that brings land, labour and capital together and arranges them into units that can prod
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