1. HUMAN PROBLEMS IN THE ECONOMIC SECTOR
By: MARSONO, ME
Teacher: Theory and Application of Economics
For Grade X Of SMANTRA
Economic activities emerge because there is unbalanced number between provided devices for fulfilling need human need.The activity for producing goods and merit must fulfill some requirements such us:
a. Thrifty
b. Accurate
c. Efficiency
Human need
Human have various need, the need wiil always develop along with the increase of age and human knowledge
Human need is unlimited this is caused by several factors such as:
1. In the increasing number population
2. The advancement of knowledge and technology
3. The advancement of social intercourse
4. The advancement of human culture
Generally, human need can be categorized in to five categories, the following are:
a. Need according to intensity,human need can be categorized in to ;
- Primary need
- Secondary need
- Tertiary need
b. Need according to characteristics can be classified in to :
- Physical need
- Spiritual need
c. Need according to subject
Based on its subject, human need can be classified into:
- Individual need
- Collective need
d. Need according to time ,human need can be classified in to :
- Now need
- Future need
e. Need according to real form .Human need can be classfied into:
- Material need
- Immaterial need.
Goods as the device for fulfilling need
Human have various need.The need must be fulfilled. The following are the discussions about visible devices for fulfilling need:
a. G oods according to the way to gain,can be classified into:
- Economic goods ( food,clothes,houses etc)
- Free goods ( sun ray, water in abeach)
b. Goods according to utility , based on utility ,goods can be into:
- Production goods ( cake ,machines,tools)
- Consumtion goods( food,drink, furniture,vehicles)
c. Goods according to the relation to other goods
- Substitution goods
- Complementary goods
d. Goods according to production processes
Based on production processes, can be classified into:
a. Raw goods (bananas, apples, cotton, rice, wood)
b. Half finished goods (string, milled rice)
c. Finished goods (clothes, rice, cake etc)
Goods utility such as:
1. Element utility
2. Form Utility
3. Place utility
4. Ownership utility
5. Service utility
The scarcity of economic resources
The scarcity emerges because the number of need is no balanced with the devices for fulfilling.
Main Economic problems
Each economic organization will encounter three main problems such as:
1. What
What must the commodities be produced?
2. How
How much the commodities be produced?
3. For Whom
For whome must the commodities be produced?
Economic System
Economic System which are used by many countries can be differentieted in to :
a. Traditional Economic System
Traditional economic system has existed since human lived in acommunity and did economic activities. Each member of the society can not fulfil all goods and merit that they need. They have to work to gether so that what has been produced by the society can be used by the other members of a society .The following are some characteristic at traditional economic system:
1. The influence of culture norms in managing economic activities very sturdy
2. The use of money has not been known or still restrict, the exchange is done with a barter system.
3. The economic activities are not market oriented, but for fulfilling the need of society itself, there economic activities are subsisten.
Based on the characteristic of the traditional economic system.Can be understood that there are excesses in a traditional economic system.
Those excesses can be explaned as follow:
Firstly : there is a spirit of autonomy for being able to fulfill the need of a society.
Secondly : the strong cultural norms and the economic activities which are only oriented to fulfill the own need, the exploitation or the use of economic resources will not be happened copious.
And lack of the traditional economic system is located in the limitation of the use of money and a subsistence economic activity.This indicates:
The lack of support to ward the advancement and the enhancement of the prosperity of society will be more prosperious.
b. Market Economic System
Asociety changes more advancing and more developing.The goods which are produced are not directed to fulfill the need of society, but they are also offered to the other societies. On the other way round, they also get the goods from other societies for fulfilling their economic need.
A market economic system is often called as liberal economic or capitalistic economic system. Thefollowing are the charateristic of market economic system:
a. The individuals propietary right are confessed
b. The freedom of endeavoring and the freedom of competing are given.
c. Production orientation to market with the aim of achieving maximal benefits.
d. Economic activities are controlled by the market mechanism, the government does not have a right to adulterate in economic.
A market economic system has an excess: in supporting the advancement and the growth of economic quickly.
It weakness:
· A gap between the rich and the poor the rich will be richer, while the poor will feel more isolated because they lose in competing.
c. Central Economic System
A central economic is often called as social or communist economic system.
The charateristics of a social economic system are as follows:
1. All of the devices and production resources are owned by a country or a society collectively.
2. The government conducts central planning
3. Central planning is the manager of state economics.
Central economic System has an axcess:
· In the effort to realize an even prosperity for the whole citizen.
Weakness:
· Of the central economic system is the susceptible to corroption and the abuse of authority by the leaders.
4. Mixed Economic System
Empirically, there is no country which implements an economic system purely.In fact, a mixed economic system is the system which is used by all countries in the world.
Based on the explanation above we can conclude that:
The excess: of this system is in the choice of characteristic or principles which are considered appropriety for each country.
Weakness: relatively, there is no weakness.
A mixed economic system is the combination of the element of traditional, market and central economic system.
2. ECONOMIC ACTIVITY OF CONSUMER AND PRODUCER
By: MARSONO, ME.
Teacher: Theory and Application of Economics
For Grade X Of SMANTRA
Along the time, each human kind cannot fulfill their own needs by their own production result. Human kind need each other in other to fulfill their necessities.human kinds as an agent of economy will do the specialization in producing goods.In economics, the role of each agen of economy is required. Household share both consumer and supplier of production factors. Government shares both producer and consumer.Beside, the government also shares on preparing public facilities. By opened economics, overseas societies also share in domestic economics.These agents of economy is interacting each in running the economics wheel.
A. Consumer and producer Behaviors in economic Activity
Economic activities cannot be separated from producer and consumer. They have their own behavior pattern in carrying out their each activity. In order to comprehend how the behavior of producer and consumer in economic activities is, read this explanation below.
1. Consumer Behavior
Theory of consumer behavior explains about consumer or buyer behavior in using and spending the income achieved .A rational consumer will try to maximize the satisfaction in using the income to buy goods and services. For that purpose, a consumer should make choices, the choices to determine the kind and number of the goods will be bought. Economic analysis of consumer behavior in making the choices can be different into two kinds of analysis form, theory of utility and indifferent satisfaction curve.
- Theory of Utility
The neckt is the example of total utility value and marginal utility value in numeral or graphical form. In this example, the number of satisfaction level obtained by a consumer from consuming durian in a day.
Tabel 2.1 Total Utility Value and Marginal utility Value
Number of durian consumed
|
Total Utility Value
|
Marginal Utility Value
|
1
|
25
|
25
|
2
|
45
|
20
|
3
|
60
|
15
|
4
|
70
|
10
|
5
|
75
|
5
|
6
|
78
|
3
|
7
|
79
|
1
|
8
|
78
|
-1
|
9
|
76
|
-2
|
10
|
72
|
-4
|
b. Analysis of Indifference Curve
Historically, theory of utility is theory preceded by explaining the consumer behavior first. But, the theory has a weakness i.e. the theory states that total utility (satisfaction) or marginal utility in numerical form. Satisfaction is something difficult to be measured. Therefore,to avoid the weakness, Sir John R.Hicks has developed new approach to describe the principal of satisfaction maximization of a consumer which has limited approach.The developed analysis is recognized in economics as analysis of indifference curve.This analysis covers two kinds of curves,i.e. the indifference curves itself and budget line.
Tabel 2.2 Combination of food and Clothes Consumption
Combination
|
Number of good
|
Clothes
|
Level of Marginal Substitution between Food and clothes
|
Food
| |||
A
|
15
|
2
|
-
|
B
|
11
|
3
|
4/1 = 4
|
C
|
8
|
4
|
3/1 = 2
|
D
|
4
|
6
|
4/2 = 2
|
E
|
2
|
8
|
2/2 = 1
|
F
|
1
|
10
|
1/2 = 0,5
|
Based on the table a bove, it can be determined the point of A, B,C,E and F which pointing on the combination of food and clothes . If the points are connected, a line will be obtained which shows the indifference curve as seen in the picture.
Indifference curve describe the consumer desire to consume goods and satisfaction level will be obtained from consuming the goods.from the curve description, the consumers ability to buy the goods combinations is not seen yet.
In reality, consumers is impossible obtain all goods which they desired. The consumers ability to obtain goods is limited by the amount of income which can be spent. Therefore, the problem faced by each consumer is how the consumers spend their income to buy goods so the maximum satisfaction level can be achieved . By only using indifference curve analysis, the problem cannot be solved yet. For the analysis, a consumers ability to buy goods needs to be known. A consumers ability to buy goods is described through the budget line curve.
Tabel 2.3 The Combination of Food and Clothes which Can be Bought
Combination
|
Food
|
Clothes
|
A
|
13
|
2
|
B
|
8
|
4
|
C
|
3
|
6
|
Based on the information stated on the table, the budget line curve can be described as follows
2. Producers Behavior
Based on economic theory,every producer has the same purpose i.e. looking for maximum profit(return). To achieve the purpose,a producer always tries to utilize production factors prossesed efficiently.
Profit or loss is a difference between selling revenue and production cost.Profit will be achieved by a producer if the selling revenue obtained is more than the total production cost spent.
a. The Law of Deminishing Marginal Return
The law of diminishing marginal return is firstly stated by an economist named David Ricardo in 1814. The empahasis of this law is stated as follow:
- If one kind of production factors is added continuously not its use,while the other production factors is constant,the additional output resulted by the addition of each production factor unit will increase in the beginning but later it will decline continuously.
b. Public Prioritizing Production Behaviors
In their activities,the producer should have the behaviors which give public priority.These producers behaviors are shown by keeping the development of economics growth and the development of live standard (prosperity) and also the environment.
B. The Roles of Producer and Consumer
In order to fulfill the human need, the goods and services should be available.Goods and services as a fulfillment tools should be made first.After made, the goods ang services will be available in society.
C. The Roles of Household,Company,Government,and Overseas Sector in Economic Activity
Agents of social economy can be classified into the sectors:
1. Household as an Agent of Economy
2. Company as an Agent of Economy
3. Government as an Agent of Economy
4. Overseas Sector as an agent of Economy
D. Circulair Flow Diagram
Every agent can be act as aconsumer or producer.
E. The Benefits of Economic Circulair Flow Diagram
Economic agents in a society can be differentiated into two i.e. producer or production household and consumer or consumtion household.The relation between production and consumption household is very close and supporting each other to reach a progress.
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