Understanding Key Economic Concepts in Business Operations

Company

Company: The economic unit responsible for combining productive resources (capital and labor resources) to produce goods and services that are then sold on the market.

Employer

Employer: An individual or organization that makes the necessary decisions to achieve certain objectives based on business interests in the given circumstances and environment.

Key Economic Terms

Benefits

Benefits: Defined as the difference between revenues and costs.

Income

Income: The amounts that the company earns from selling its goods or services during a specified period.

Costs

Costs: The expenses associated with the production of goods or services sold during the period.

Productivity

Productivity: The production per unit factor, generally referred to as output per worker employed.

Time Frames in Economics

Short-Term

Short-Term: The period in which only the amount of any of the factors can vary.

Long-Term

Long-Term: A period in which the factors may vary, meaning that no factor is fixed.

Investment Decisions

Investment Decision: A long-term decision regarding whether to build, buy, or rent plant and equipment.

Technological Advances

Advances in technology increase productive potential, as reflected in increases in the amount of goods and services that can be achieved with available resources, while also reducing costs per unit of output.

Distribution of Goods

Distribution: The set of activities aimed at bringing goods and services to consumers.

Sectoral Structure of Production in Argentina

The sectoral structure of production in Argentina is as follows:

• Services: 50%
• Industry: 22%
• Agriculture: 9%
• Construction: 4%

Competitiveness

Competitiveness: The ability of a company to compete and gain market share from other companies.

Labor Market Dynamics

Labor Market: The sphere in which individuals offer their labor to companies in exchange for a salary. Companies demand labor to carry out production.

Demand for Labor

Demand for Labor: The number of workers that companies are willing to hire at each wage level.

Job Offer

Job Offer: Determined by the number of people willing to work at different wage levels.

Market Dynamics

Demand for Goods

The quantity of goods individuals demand at a given moment depends mainly on price. The higher the price, the fewer individuals are willing to buy.

Supply

The offer price reflects the different amounts producers are willing to offer. When prices are low, a reduced amount will be offered.

Equilibrium Price

The equilibrium price is where the plans of the applicants and bidders coincide. Prices act as guidelines to freely allocate productive resources and solve three basic problems:

• What to produce?
• How to produce?
• For whom to produce?

Free Market Operation

In market economies, the free operation of market prices for goods, services, and factor markets resolves financial problems.