Understanding Economics: Production, Distribution, and Consumption

Posted on Feb 16, 2025 in Economy

Objective of the Economy

Data from Silo XVIII

Economics, as a general concept, deals with:

  • Social processes of production: Relationships established between people.
  • Social relations of distribution: The appropriation and consumption of goods and means of production.
  • Needs and demands of society: Historically defined processes in relation to technological development.

In short: Production > Distribution > Consumption

Those who benefit most are the exporters and producers.

Three Key Economic Choices

What to produce: This is related to goods and services, with the amount depending on needs, which can be individual or group.

Scope of Economics

Behavior is analyzed at two levels, corresponding to two branches:

Microeconomics

The object of study is the behavior of specific units, individually:

  • Consumer
  • Resource owners
  • Companies
  • Family
  • Production units
  • Goods and services preferences
  • The market
  • The costs incurred

Microeconomics focuses on individual decision-making in companies and households. The government does not exert direct control over economic activity. Microeconomics addresses specific industry product prices, the number of workers employed by a single company, and the income of a particular family.

Family Decisions
  • What to buy?
  • When to buy?
Company Decisions
  • What to produce?
  • When to produce?
  • For whom to produce?

Microeconomics studies:

  • Utilities, revenue, and expenditure.
  • Consumer behavior, which depends on the theory of demand.
  • The theory of production and costs.
  • The theory of properties and production, and the formation of relative prices.
  • Market characteristics and market rates.
  • The interaction of supply and demand in competitive markets.
  • Variations in income.
  • Assumptions of rational behavior.
  • Maximizing satisfaction.
  • Maximizing utility.

Relationship of Power and Authority

It is important to address power and authority.

Authority

  • It is the faculty that the company has given to govern a working group, taking over all conditions to lead, control, reward, admonish, and impart accurate platforms, which must be fully met.
  • Authority is acquired based on confidence gained for capacity reasons and will depend on the results, both for superiors to grant it.
  • It is important to know that it is not only enough to accept the authority that the company gives, but it must also be exercised properly, considering the human group in all aspects.
  • Another crucial aspect is to manage and lead. Our authority will have limits on what we have been provided, so that we do not go too far in our exercise.

Power

  • Becomes the complement of authority, primarily in the personal skills that every supervisor must have to maintain and represent.
  • Is the ability to direct, drive, and manage an institution, marking a business plan.
  • Management depends on the knowledge of project management, planning, monitoring, and evaluation of the achievement of objectives and targets.
  • Must have leadership skills to raise sectoral policy management strategies, promoting teamwork and using the capacities of human talent.