1
Summary economics block 1.4
Chapter 1
The ready availability of goods and services to fulfil needs is termed prosperity. The
excess of human needs over what can be produced is termed scarcity. Economic
activity occurs when people make choices to maximise their prosperity using scarce
resources. The science of economics is concerned with the study of economic activities.
The field of economics consists of the following things:
- Industry analysis. This is the study of the characteristics of the markets and
business sectors that companies come into contact with.
- Macroeconomics. This deals with the economic activities at a national level.
- Monetary economics. This is concerned with the money and the role of the bank
in the economy.
- International economics. This is the study of international trade between
countries, international capital flows and monetary relations between countries.
The business environment covers all the changes in the environment of a business that
can have an effect on a company’s results.
The direct environment is made of the buying or selling markets on which the
company operates. Entrepreneurs are in on-going contact with the market players,
collecting information to effect as advantageous a quality-price ratio for their raw
materials and products as they can.
The indirect environment consists of employer and employee organisations, the
government and cultural elements such as public opinion and the media. A company has
little influence on the indirect environment, but the indirect environment has a great
influence on the company.
The macroeconomic environment belongs to the wider company environment. This
environment takes in economic trends, variations in exchange rates and the price of raw
materials and demographic developments.
The increase in value of a variable is known as the nominal increase. The change in
quantity is known as the real increase. The nominal increase is equal to the real
increase plus the price increase.
The relation between the total wages, wages per employee and the number of
employees is:
Total wages= the wage per employee x the number of employees
The relationship between the changes is:
The relative increase in total wages= the relative increase in wage per employee x
the relative increase in number of employees
Chapter 2
Demanders and suppliers negotiate with each other about the price of a product. This
negotiation can be very direct, for instance like on a daily market or in retail situations,
Esmee Dukers IE1GC
Summary economics block 1.4
Chapter 1
The ready availability of goods and services to fulfil needs is termed prosperity. The
excess of human needs over what can be produced is termed scarcity. Economic
activity occurs when people make choices to maximise their prosperity using scarce
resources. The science of economics is concerned with the study of economic activities.
The field of economics consists of the following things:
- Industry analysis. This is the study of the characteristics of the markets and
business sectors that companies come into contact with.
- Macroeconomics. This deals with the economic activities at a national level.
- Monetary economics. This is concerned with the money and the role of the bank
in the economy.
- International economics. This is the study of international trade between
countries, international capital flows and monetary relations between countries.
The business environment covers all the changes in the environment of a business that
can have an effect on a company’s results.
The direct environment is made of the buying or selling markets on which the
company operates. Entrepreneurs are in on-going contact with the market players,
collecting information to effect as advantageous a quality-price ratio for their raw
materials and products as they can.
The indirect environment consists of employer and employee organisations, the
government and cultural elements such as public opinion and the media. A company has
little influence on the indirect environment, but the indirect environment has a great
influence on the company.
The macroeconomic environment belongs to the wider company environment. This
environment takes in economic trends, variations in exchange rates and the price of raw
materials and demographic developments.
The increase in value of a variable is known as the nominal increase. The change in
quantity is known as the real increase. The nominal increase is equal to the real
increase plus the price increase.
The relation between the total wages, wages per employee and the number of
employees is:
Total wages= the wage per employee x the number of employees
The relationship between the changes is:
The relative increase in total wages= the relative increase in wage per employee x
the relative increase in number of employees
Chapter 2
Demanders and suppliers negotiate with each other about the price of a product. This
negotiation can be very direct, for instance like on a daily market or in retail situations,
Esmee Dukers IE1GC
