Business economics

The raw material will come from land, taking the example of oil, gas. The labor 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. Considering an example of project of creation of a manufacturing company based in the I-J, the resources needed for the realization 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, semi-skilled and non-skilled. Materials, tangible items such as steel, concrete, lights, wood, cables, paint required by the project. Equipment, everything used to bring all the materials together, for example, cranes, welding sets, computing time, mobile offices. It is also important to know how such money committed to spend at any point in time. . 1. 1 The microeconomics perspectives: This focuses on the market behavior of individual consumers and firms to help understand the decision making process of firms and households. This is at a level of individual buyer and individual seller, meaning demand and supply. How much to produce and how much to charge for it. The law of the demand is that the demand decreases when the price increases and the demand increases when the price decreases. Also more demand of a product results in an increase of the price the price of that reduce. (See graph below). 2. 1. The macroeconomics perspectives, focuses on the big picture of the national economy as a whole and provides a basic understanding of how things work in the business environment. The microcosmic policy goals will be achieved by the monetary policy and the fiscal policy. The monetary policy is the management of the nation money supply, the decision of the interest rate and the banking system to promote economic growth, lower unemployment and inflation. 2. The factors influencing optimum size and the significance of demand and supply legislations: The demand and the supply are two main concepts of the economy.

Demand is what quantity of product or service the buyers need at a certain time at a precise price. The supply is the quantity the market can offer at that same time and price. The relationship between the quantity demanded and the price is the demand relationship and the relation between the supply and the price is the supply relationship. The price is a reflection of supply and demand. The law of demand: When the price of a product goes up, the quantity demanded of that product goes down.