Transforming a set of inputs into a set of output is the essence of economic activity. Through the process of transformation, the value of the output generated must exceed the value of input utilized. Creation of net value addition is the basic objective of all such activities. On the input side we have reference to men, materials, management etc. By output we have reference to various kinds of goods and services. Goods can be consumer goods, public goods, merit goods, and non merit goods. The purpose of any economic activity such as production and final consumption is to create “Surplus” or profit. Some of the NGOs & NBOs (Non-Business Organisations) may not aim at private profits, they aim at social benefits. All organizations are organizing activities which are either commercially profitable or socially desirable. For an economist, all these organizations represent “economic enterprises”. We can say that business is an organized effort to provide goods and services to make profit.
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Business Economics is useful in decision making by business firms regarding the least cost input ...