The economic process It is a set of activities that man carries out continuously and permanently to generate the necessary means that satisfy the needs of the population.
Economic growth reflects an increase in the production of goods and services in an economy. Therefore, its value in a given period of time is calculated from estimating the value of everything that occurred in one year, and compare it to the value of everything that occurred in the same time period of the year last.
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In this article you will find:
Bases of the economic process
The bases of the economic process are:
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The production
Production is the activity aimed at generating goods and services that meet the needs of a given population. In this stage the factors of production intervene are: the land, capital, the company and the state.
Circulation
At this stage, the transfer is made from the production site to the place where it will be purchased by the different consumers.
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Distribution
In the distribution stage, wealth is distributed among the different productive factors that participated in the process.
Consumption
In the consumption stage, social needs are satisfied by making use of the goods and services that have been developed.
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Investment
In this last stage, financing is given to start a new process, through the acquisition of tools, machinery and capital goods.
Origin of economic process
In economics it is said that people are studied, but with this he refers to studying human action, how people do to satisfy their needs and increase their well-being. In this vein, what people do is use means, resources, goods and services to satisfy their needs and increase their well-being.
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Those needs that people have are subjective, unlimited, of a different order of urgency and In addition, they change with time, they are dynamic, and we can also classify the needs as vital and not vital.
All these needs are satisfied with goods and services or consumer products, which can be from reading a book or attending a temple, to eating a meal. hamburger or send a letter, but those needs and the means of obtaining them are in tension as the needs are limitless and the resources are scarce.
The means of production and the means to produce goods and services such as land, labor and capital goods are scarce in relation to the immense quantity of needs.
Needs and division of labor
For any isolated man the needs are more than the resources, now for two people the The problem would be how to cooperate to divide the work and have each one specialize in different activities.
The effects of this division of labor have to do with saving time, with learning, with the introduction of new methods of work to be more productive, leading to higher productivity, both saving time and learning from repeating tasks such as introducing Innovations in production allow us to produce the same quantity with fewer resources or in the same time and with the same resources, more quantity of goods and services.
Both the technical division in the field of a production process and the social division in the field of different production processes lead to increases in productivity.
Pricing system
The price system is basically going to serve us to communicate information. It is that the economic problem is not so much a problem of how to divide tasks or how to allocate resources, but a problem of communication of information that is dispersed among the individual members of a society
That information that is scattered is not that it will be used chaotically. In society under certain institutional requirements, under certain rules, under certain regulatory arrangements, that information can be transmitted through the price system.
When the public values a product more keeping everything else constant, the price tends to increase and that signals to other individuals what to do with those scarce resources, for For example, entrepreneurs upon detecting a price increase may decide to produce more of this good because there are more profits there and because an opportunity has appeared that was not previously available available.
The price system is not only important to understand how a price is formed, the most important thing perhaps is to understand how prices transmit information to economic agents to decide what to do with their resources available.
Conclution
The economy is at the confluence of the physical world and the social world, seeking solutions and creating proposals that are universal and applicable in reality.
The economic process It is essential in the development of society because it shows us how human and financial capital is passing through different phases and how it is transforming all investments in order to generate a better quality of lifetime.
