Purpose of the economy and its stages: production, circulation, distribution and consumption

As science is social, cultural with an object that is the economic life of society at any given time. The classical doctrine of economics defined the same as "an inquiry into the nature and cause of national wealth", so the definition Adam Smith (founder of economic science) in his work with the same name.

Economists now agree to define economics as a science of human behavior. In this sense, defined as the science that studies the aspect of human behavior that is related to how to use scarce resources to meet the maximum of the human needs. In this definition of economics includes a concept that is necessary, that in an economic sense has a much greater extent than it does in the ordinary sense.

That term is defined as the desire to prevent or to stop a bad situation or to enhance a pleasant situation. This term includes the smallest needs to the largest.

All human activity from this point of view can be analyzed economically. To understand some aspects of the economy we need to define certain points: 1) economic good and 2) concept of utility. 1): economic good: it is suitable for everything satisfaction of needs that are scarce in relation to these and to support a variety of alternative uses.

The classical economists argued that economic goods were only material things, today this position is absolutely overcome, because there needs to be met through the provision of services. Understanding as such, the use of the work in satisfying human needs. Surgical intervention is a necessity, carried out by human intervention.

2): The concept of utility: the attitude of the goods to satisfy human needs classified as eligible or not. Things are useful according to the value given to them.

Purpose of the economy: it is knowing, analyzing in particular aspects of human behavior and that particular aspect is related to human behavior, when you choose modes that are rare and welcome alternative uses, this distinguishes it from the sociology of a part .

There are three types of economies: a) pure economics, b) applied economics c) political economy. The pure economics is that part of economics that analyzes and seeks economic laws in an objective and universal. Applied economics is the basis of the findings obtained in pure economics, determine cost effective solutions for a given thing.

Political economy is not a science but an art or a social doctrine and involves economic solutions add value criteria to determine the economic field, to delineate the art of conducting public affairs in the economic sphere.

Fundamentals of economics: there are four stages:-Production, Circulation, Distribution, and Consumption-. The classification into four stages can be traced back to classical times. While economists now agree with it, because it keeps a clear classification that allows easily see the various stages of the economy.

-Production: is to create goods, means suitable for human satisfaction. This result is to produce, you get when you change location or stored until needed. Every act of production is necessarily involve a number of factors of production are: land, capital and labor. Earth is not only essential for farming, but all human activity requires a territory where their development.

Work: economic sense is every human effort, normal or intellectual contribution to the production of a commodity. The work is developed through specialization of labor, which is a fact.

Capital: production factor is defined as the good produced in previous periods are not intended to consumption (production of new goods). The total of goods produced in a country is called income, some of it is saved and invests capital for new economic goods. By capital is meant not only money, but material goods such as machinery.

-Movement of goods: the social phenomenon par excellence in the economy, necessarily imply the existence of the group (so-called market.) Began by barter. The early man changed one thing for another. Then as you develop economic means, it is necessary to adopt a common pattern that fits all have a common value used in that sense the cattle.

Then looking for a metal as a measure of value and that may collect metal passing from cattle. Today there is not much money, but paper money, credit card, checks, credit cards. Trustees, called the paper money , we have faith in that paper money.

-Distribution: distribution of goods is the way income is distributed national income that make up the individual or individuals. The national income consists of income within a year. The income obtained by the payment of the factors affecting production. In that sense the price or cost of land held for producing income is called. The price of labor is called wages. The price of capital is called interest.

If the factors of production (land, wages and capital) have a price, the company will face a cost of production. The production cost is the total expenditure that a company makes in order to produce certain items. That cost of production can be divided into: - fixed cost, variable cost. The fixed cost is the cost required to produce any amount.

The variable cost is the cost required to produce each unit, for example the need for leather footwear. If these two costs are related to obtain the "law of economy of scale." Higher Production, the lower the cost of each unit . The company that produces the maximum production gets more profit.

-Consumption: goods and services is used in meeting human needs. Every economic subject spend most of their income, sometimes all. Whatever the case, the individual must make choices about spending. Consumption is a key element because it determines the production.

Adapting production to consumption is achieved by planning for various economic systems. In all systems there is state intervention. The systems used in modern times are: - the planned economy - the command economy and - the economy system of free competition.

In the planned economy, the state decides how much to produce and what kind of product. By regulating the production also regulates consumption through vouchers or coupons which rational consumption. There is no private initiative in economic freedoms for no produce what is needed. Limit the freedom of man. I never could have foreseen in perfect shape consumption, derived from their mistakes scarcity.

The command economy is preserved and secured private property, but limits their free disposal. The state intervenes through pricing of obstacles, trying to orient production towards those sectors that interest either the state or society. This system has flaws, is the inability to foresee all the needs of the consumer market. It is very difficult to organize a flexible pricing to maintain a stable balance in the economic system.

This system presupposes the existence of three basic principles: - private property and free initiative of the producer and consumer. Legal legal structure leaves a margin of freedom to the decision of producers and consumers, it is the latter which means the demand for oriented goods and services production. For this process to develop, be free competition.

The competition is also called concurrency and has an effect on production volume and cost. An abnormal is the monopoly system, which consists of a single producer, and therefore produces the quantity you want and you set the price that he considers. None of these systems alone satisfy the needs.

Imperfect competition: is the most produced within the system of free competition. It occurs when there is a small number of producers is frequent where agreements are made to set prices or determine production quotas. When there are large companies, decidedly influence the price of the products.

The increasing propaganda makes imperfect competition (leading to consumption) is not always as convenient. In this sense the state can intervene and correct the defects of the system to bring it closer to perfect competition and regulate prices of those products away from the system of free competition. Mixed system: The system in which the state intervenes in the competition. It is the most widely used in contemporary times. I invite you to visit http://www.magazineofsales Digital Library . com where you'll find items of proven quality for your personal and spiritual development: Work out (training courses: solar energy, electronic security systems), Health (Natural Treatments), Sports, Entertainment, Computing, Languages, and more.