Business is an economic activity, which is concerned with the creation of wealth.It is restricted to only those activities that relate to production ,distribution and exchange of goods and services .Purchase of commodities for self consumption or preventing gift or donation is not business.All business activities are economic activities but all economics activities are not business.Hence, an economic but all economic has four aspects:(1)creation of utilities,(2)regular exchange,(3)satisfaction of human wants ,and (4)economic gain.Now let us examine how far business satisfies these four criteria of an economics activity.
(1)Creation of utility:Business creates various types of utilities of goods.The utility may be form utility,place utility,time utility,etc.Utilities are created by means of production.When raw materials are proceed into finished goods,it form utility.By transporting goods from one place of production to the place of consumption,place utility is created.The process of storing goods when they are not required and supplying them at a time when needed is called time utility.In these ways business creates many utilities in goods.Hence,business is essentially an economic activity.
(2)Regular Exchange:Business is an economic activity which involves regular exchange of goods and services.It also include some services e.g. banking, transport, insurance,etc. which facilitates exchange.There is no business activity when a person grows vegetables in his kitchen garden for consumption by family members .This is because vegetables are not produced for exchange.Similarly one or few dealing do not constitute business.Similarly transactions should be repeated several times.
(3)Satisfaction of Human wants:The ultimate aim of a business is to satisfy human wants by providing goods and services to the consumer.The business should try to satisfy the consumers so that demand for his product is maintained.The existence and expansion of business depends solely upon the satisfaction of the consumers.
(4)Economic Gain:A business produces goods and services for sale at a price which often more than the cost of production.The excess gain,which is the main motive of every business.Thus, business is performed with a view to earning profit.Without profit motives business will not be an economic activity.A business needs profit not only for its existence but also for expansion and diversification.The investors want an adequate return on their investments,workers want higher wages and the businessman needs money for reinvesting.These can be met only when some money are made.The profit motives does not mean exploiting consumers by charging higher prices for low quality goods.The businessman should charge a reasonable profit and it will be beneficial both to society and business.
(1)Creation of utility:Business creates various types of utilities of goods.The utility may be form utility,place utility,time utility,etc.Utilities are created by means of production.When raw materials are proceed into finished goods,it form utility.By transporting goods from one place of production to the place of consumption,place utility is created.The process of storing goods when they are not required and supplying them at a time when needed is called time utility.In these ways business creates many utilities in goods.Hence,business is essentially an economic activity.
(2)Regular Exchange:Business is an economic activity which involves regular exchange of goods and services.It also include some services e.g. banking, transport, insurance,etc. which facilitates exchange.There is no business activity when a person grows vegetables in his kitchen garden for consumption by family members .This is because vegetables are not produced for exchange.Similarly one or few dealing do not constitute business.Similarly transactions should be repeated several times.
(3)Satisfaction of Human wants:The ultimate aim of a business is to satisfy human wants by providing goods and services to the consumer.The business should try to satisfy the consumers so that demand for his product is maintained.The existence and expansion of business depends solely upon the satisfaction of the consumers.
(4)Economic Gain:A business produces goods and services for sale at a price which often more than the cost of production.The excess gain,which is the main motive of every business.Thus, business is performed with a view to earning profit.Without profit motives business will not be an economic activity.A business needs profit not only for its existence but also for expansion and diversification.The investors want an adequate return on their investments,workers want higher wages and the businessman needs money for reinvesting.These can be met only when some money are made.The profit motives does not mean exploiting consumers by charging higher prices for low quality goods.The businessman should charge a reasonable profit and it will be beneficial both to society and business.
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