The Foundation of Business

Economics : The Foundation of Business
Economics is the study of how society chooses to use scarce resources to produce goods and services and to distribute them to people for consumption. A national’s resources consist of natural, capital, and labour resources.

Natural resources are provided by nature in limited amounts; they include crude oil, natural gas, miniral timber, and water. Natural resources must be processed to become a product or to be used to produce other goods and services. For examples, trees must be processed into lumber before they can be used to build homes, shopping malls, and hospitals.
Capital resources are good produced for the purpose of making other types of goods and services. Some capital resources are called current assets. They have a short life and are used up in the production process. These resources include fuel, raw materials, paper, and money. Long-lived capital resources, which can be used repeatedly in the production process, are called fixed capital. Examples include factory building, machinery, and means of transportation.
Labour resources represent the human talent. To have value in the labour force, individuals must be trained to perform either skilled or semiskilled work. For example, the job of a manager requires extensive training, whereas only minimal training is needed to operate a service station’s gas pump.

Goods and Services. The resources are used to produce goods and services that will satisfy people’s need and wants. Goods are tagible items made by business, such as shoes and cars. Services are intagible items, things that can’t be held. Touched, or seen, provided by organizations for their consumers.

Resources Allocation. The process of choosing how resources will be used to meet people’s need and wants is called allocation. All countries face the economic problem of limited resources and unlimited wants. Because we live in a world in which the quantity of all resources are limited, we must make choices about how to use these scarce resources. We have a basis for choosing the way of using and allocating the resources to satisfy our wants and needs.
The allocation involves the distribution of goods and services to consumer. Allocation also involves an exchange (e.g. money, goods, time, service) between a business and a consumer. The business earns a profit and the consumer is satisfied with the good and the consumer is satisfied with the good or service. The exchange provides mutual benefit.

VOCABULARY
1. STUDY : KAJIAN
2. SOCIETY : MASYARAKAT
3. RESOURCES : SUMBER DAYA
4. NATURAL RESOURCES : SUMBER DAYA ALAM
5. LABOUR : PEKERJA
6. AMOUNT : JUMLAH
7. CAPITAL : MODAL
8. CRUDE OIL : MINYAK MENTAH
9. NATURAL GAS : GAS ALAM
10. MINERAL : HASIL TAMBANG
11. TIMBER : KAYU GELONDONG
12. LUMBER : KAYU OLAHAN
13. PRODUCT : PRODUK
14. SHOPPING MAL : PUSAT PERBELANJAAN
15. PURPOSE : TUJUAN
16. FUEL : BAHAN BAKAR
17. RAW MATERIAL : BAHAN MENTAH
18. MEANS OF TRANSPORTATION : SARANA ANGKUTAN/TRANSPORTASI
19. TALENT : BAKAT
20. LABOUR FORCE : ANGKATAN KERJA
21. DISTRIBUTE : MEMBAGIKAN
22. CONSIST OF : TERDIRI ATAS
23. PROVIDE : MENYEDIAKAN
24. INCLUDE :MENCAKUP, MELIPUTI
25. REPRESENT : MENCERMINKAN, MENGGAMBARKAN
26. TRAIN : MELATIH
27. REQUIRE : MEMERLUKAN
28. OPERATE : MENGOPERASIKAN
29. SATISFY : MEMNUHI KEBUTUHAN (ORANG)

Question for Comprehension
1. What is economics?
2. What do a nation resources consist of?
3. What do natural resources include?
4. Whatdo people do to natural resources in preparing for use?
5. What are capital resources?
6. What are current assets?
7. What are fixed assets?
8. What is the difference of current assets from fixed assets?
9. What is the difference of needs from want?