Definitions and Concepts in Economics Studies

explanations and Concepts in frugals StudiesTask 1a. Definition of economic. economic science is a social learning researches the achievement and consumption of practiseds and the transfer of wealth in human connection. Economics explains human behavior as a relationship between ends and meagre means which have option usages. in that locationfore, economics is the study of trade-offs when selecting between alternative sets of decisions involved. (Study Economics 101, 2014)Purpose of its activities.The main purpose of economic activity is the production of goods and services to satisfy consumers needs and wants. To meet the needs of the tribe to use both as a way of life unless withal to meet their ever-growing demand for a better lifestyle or standard of living. (Norsafiah, 2012)Economic problems.The basic economic problem is or so scarceness and excerption since there be only a limited center of re consultations avail up to(p)-bodied to produce the unlimited am ount of goods and services which human, people wants and needs. Because of scarcity, miscellaneous economic decisions must be made to every last(predicate)ocate resources expeditiously. (Norsafiah, 2012)Definition demand Needs argon the things we must possess in order to carry through food, water, and clothing. (Norsafiah, 2012)Wants Things that human would like to have in order to improve the emplacement in life. Having limited resources leads to why we encounter this problem. (Norsafiah, 2012)Scarcity Resulting from the lack of handiness in resources, from peoples insatiable wants, or from a conspiracy of the two. (Norsafiah, 2012)Choice Resources are scarce and most of our wants are extensive, a choice has to be made about how to use scarce resources in the trump out way. Based on the choice, the highest-value option get out be forg oneness and this is called opportunity be. (Norsafiah, 2012)Example of economic problem nowadaysi. LandLand includes all natural resources much(prenominal) as water, soil, natural oil and metal ores. (Norsafiah, 2012) congenital resources are either re tenderable or non-renewable depending on whether or not they replenish naturally. Natural resources are materials and components can be found within the environment. Every man-made product is composed of natural resources. Due to increase scarcity but also because the exportation of natural resources is the basis for some(prenominal) economies. (Norsafiah, 2012)ii. LaborLabor includes all physical and mental effort such(prenominal)(prenominal) as construction lying-in import from Bangladesh, Myanmar and Vietnam to occupy the emptied position to do the labour work. Since, the local tend to get blue collar bloodline that has more than stable income and less risk compare to construction labour work. (Norsafiah, 2012)iii. CapitalCapital includes machinery and other(a) items that go into further production such as the latest technologies that needed to use in constr uction passage that only available at other region. In order to use the technologies need to import it and it cost more including the transportation cost , acquirement labour cost that only few of them knows to ope point the technologies and other unhoped cost. (Norsafiah, 2012)iv. Enterp initiationEnterprise is the art of combining the other three factors in the production process. (Norsafiah, 2012)b. Discuss and outline a comparison between add together and requisite. releaseDemandDefinitionThe go forthingness and faculty of transporters to produce and cover to sell different quantities of goods at different prices during a specific time menses. (Ksamouce, 2014)The willingness and skill of demoralizeers to purchase different quantities of a good at different prices during a specific time period. (Ksamouce, 2014)LawsAs the price of good rises, the quantity supplied of the good rises, and as the price of a good falls, the quantity supplied of the good falls.(Ksamouce, 2 014)As the price of a good rises, the quantity demanded of the good falls and as the price of a good falls, the quantity demanded of the good rises.(Ksamouce, 2014)EquationPp =SsSs =Dd abstractive ope rationsAs the price increases, other things constants, a producer becomes more willing to furnish the good. Price act as argues to existing and authorization suppliers about the rewards for producing various goods at higher(prenominal) price attract resources from lower-valued uses.higher(prenominal) price also increase the producers ability to supply the goods. Since, producers face higher marginal cost of production, they must receive a higher price for that output in order to be able to increase the quantity supplied.Substitution readyWhen a Price of a good increase, its relative price makes consumers less willing to purchase this good.Income EffectWhen the prices of a good increases real income pooh-poohs reduces the ability to buy good decline in quantity demandedExampleSu gar factory willing and able to supplied sugar and sell 1000 packet during Hari Raya season at RM 2.50 per packet.P(RM) fork up Qty no(Demand)Mirae demand for comic by saying that she is willing and able to buy 30 comic a month at RM 8 per comic.P(RM) Supply Qty no(Demand)Task 2It is best to think the cost-benefit analysis approach as a way of organizing thought rather than as a fill-in for it. Michael Drummond-Cost Analysis BenefitCost Analysis Benefit estimates and totals up the equivalent notes value of the benefits and be to the community of interests of retchs. (Watkins, Valley Alley, ET, 2014) It has been constituted as a tool for use by the government in qualification their social and economic decisions. While it also measures costs and benefits to the community of adopting a particular course of action such as constructing a highway. Cost Analysis Benefit a decision making trick for evaluating activities that not priced by the commercialise by attempts to stimulate a foodstuff result in areas where the market does not operate to establish prices or to quantify and include in estimates of cost and benefits to the client but also the community. (Norsafiah, 2012)ExampleImprovements in transportation often involve saving time. The drumhead is how to measure the value of time saved. The value should not be unless what transportation planners think time should be worthy or tied(p) what peoplesay their time is worth. The value of time should be that which the public reveals their time is worth through choices involving tradeoffs between time and money. (Watkins, Valley Alley, ET, 2014)Task 3Definition of Price Mechanism by Adam Smith.Adam Smith defines the lightless hand of the price mechanism in which the hidden hand market operates in a competitive market through the pursuit of resources allocated egoistic best interest of the community. (Riley, 2012)TheoryPrice mechanism is a endpoint used to describe the means by which millions of decisio ns taken by consumers and businesses act to determine the allocation of scarce resources between competing uses. (Riley, 2012)Theprice mechanism plays three historic functionsin a marketSignaling functionThey adapt to indicate where resources are needed, and where they do not. If prices rise due to high demand from users, this is a signal to the supplier to increase production to meet higher demand. Prices go up and down to reflect scarcities and surpluses. (Riley, 2012)Transmission of preferencesThrough their choices consumers send information to producers about the changing nature of needs and wants. (Riley, 2012)Rationing functionPrices serve to ration scarce resources when market demand exceeds supply. (Riley, 2012)ExampleRON95 petrol and diesel was change magnitude by 20 sen to MYR2.10 a liter (+ 10.5%) and MYR2.00 per liter (+ 11.1%), effective family 3, 2013 fuel prices were last raised in July / Dec 2010 (5.7 %).The expected rival of this 3 Sep fuel price hike to be scu rvy on the earnings of research coverage. Sectors directly impacted would be the twist materials which are the steel and cement that consume relatively more mess up and electricity than the other sectors. (Maybank IB Research, 2013)Higher diesel prices will lead to higher costs in managing construction machinery or heavy equipment and transportation costs are higher for construction materials. Building material prices could still rise due to the increase in transportation costs. Most contractors have in time been associated raw material cost increases in their construction projects. (Maybank IB Research, 2013)Task 4a. Definition of competition in business.Competition in which every trafficker tries to get what othersellersare looking at the same timesales,profit, andmarket shareby offering a combination of the best practices of price, quality and service. If market information flows freely, competition plays a regulatory function in the supply and demand balance. (Business Dicti onary, 2014)b. Factor modify the economics of an organizationDemand and SupplyDemand and supply are the two main factors that affect the working of any business model. Demand is the will and ability of consumers to buy certain commodities, while supply is the ability of the business to provide for the demand.Example, mobile phones embedded with latest technologies introduced in the market, it will have a higher price because of the demand in the market. Prices will continue to rise if the supply does not meet demand. (Buzzle.com, 2014)Economic harvesting and DevelopmentEconomic growth set financial sum lodge as a whole is showing total income and training of the money invested in long-term channel up gradation. Among all the economic factors, the development is one of the most primal, as a business that has to meet the demands of society in terms of a dynamic rescue.For example, luxury brands performed well during the economic upturn, more than the companies that produce signi ficant deals. (Buzzle.com, 2014)Income and EmploymentImportant aspect of the economy that affect business operations, is the density of employment and income levels. The per capita income and density of employment determines the rate of demand, density of demand, and also the purchasing power of the people.For example, during the development of the economy, there are jobs that generate income that allows people to have a stronger purchasing power. On the other hand, as the density of employment and income levels dropped in the recession, peoples purchasing power is reduced. (Buzzle.com, 2014)c. ascendent of finance. ancestry of financeExampleInternal(raised from within the organisation)Owners investment hold profitsSale of stockSale of mulish assetsDebt collectionExternal(raised from an outside source) jargon LoanBank Overdraft superfluous PartnersShare IssueLeasingHire PurchaseMortgageTrade referenceGovernment GrantsTask 5SP Setia Sdn Bhd has decided to develop massive residenti al projects in Greater Klang Valley area after considering the factors of rate of military show up and the cost benefits analysis conducted.a. Definition of finance sourceMoney available for a business to spend in the form of cash, liquid securities and credit. in the first place going into business, entrepreneurs need to obtain sufficient financial resources to operate efficiently and well enough to encourage success. (Business Dicionary, 2014)Types of sources based on the projectSource of financeUse Source of finance bear profitsRetained earnings in the company and not paid to shareholders as dividends. Retained earnings are widely regarded as the source of the most important long-term finance for business. (Aashfield, 2009)Bank LoanThis is money borrowed at an concord rate of interest over a set period of time. This is a medium or long-term source of finance. (Aashfield, 2009)Bank OverdraftThis is where the business is allowed to be overdrawn on its account. This means they can still write cheques, even if they do not have enough money in the account. This is a short-term source of finance. (Aashfield, 2009)Additional PartnersThis is sources of finance suitable for a partnership business. The new partners can contribute extra capital. (Aashfield, 2009)MortgageThis is a loan secured by property. Businesses will own the property once the last(a) payment is made. This is a long-term source of finance. (Aashfield, 2009)Government GrantsGovernment organisations such as Invest NI offer grants to businesses, both established and new. ordinarily certain conditions apply, such as where the business has to locate. (Aashfield, 2009)b. Propose a financing source suitable for the project.Based on the SP Setia Sdn Bhd massive residential projects in Greater Klang Valley area, I propose to use Retained profits, Bank Loan, and Additional Partners as multiple financing sources. The reason I choose to use multiple financing source because this project is massive proje ct and it needed more resource, if just rely on one source is not enough to cover the whole cost of project. (Aashfield, 2009)Firstly, by uses kept up(p) profit method SP Setia Sdn Bhd victimisation their internal source, these earnings are pronto available to the management and directors dont have to ask outsiders for finance.Retained earnings are cheaper than international equity because the floatation costs, brokerage costs, underwriting commission are other issue expenses are eliminated. Relying on retained earnings eliminates the fear of ownership dilution and pass of control by the existing shareholders. Retained earnings carry incontrovertible connotation as compared to equity issue as far as stock market is concerned. (Shenoy, 2012)In addition, applying for a bank loan because they offer a set repayment spread over a period of time which is good for the budget. Therefore, to maintain the project operating cash flow, and making it easier for SP Setia Sdn Bhd to cover une xpected expenses. Thus, SP Setia Sdn Bhd are able to make payments on their loans using the new income earned from businesses grow. (Bolander, 2011)Lastly, use partnering the ability to raise funds whitethorn be increased, both because two or more partners may be able to contribute more funds and because borrowing capacity may be greater. Prospective employees may be attracted to the business if given the incentive to become a partner. Partnerships can benefit from a combination of antonymous skills of two or more people. Have a broader knowledge, skills and contacts. Partnerships can be cost-effective as each partner specializes in certain aspects of their business. There are opportunities for income splitting, the advantages of particular interest because of the tax savings generated. (Koppel, 2009)In conclusion, I propose on using multiple financing source such as Retained profits, Bank Loan, and Additional Partners to finance the massive residential projects in Greater Klang Valley area since rely on one source is not enough to cover the whole cost of project. savoir-faire1 What is Economics?, (2014), Online, easy from http//www.whatiseconomics.org/ 17 kinfolk 20142 Thayer Watkins, Silicon Valley Tornado Alley, (2014), An foot to Cost Benefits Analysis, Online, visible(prenominal) from www.sjsu.edu/faculty/watkins/cba.htm 17 family line 20143 Norsafiah Bt. 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