Economic entity: description, types and features

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:40

Economic subjects are individuals or social groups that study the surrounding world and its objects and influence them in the course of their work. They can be: an individual, a family, social groups, enterprises, the state, and so on. The subjects of economic relations make decisions, putting their skills into practice, and are responsible for the results of their work. Consider further their specifics.

General characteristics

Today, the activities of all economic entities are quite specific. It depends on the role they play in certain historical conditions, which is characterized by relative isolation, the presence of models of rational behavior, independence and established rules. In a number of sources, the subjects of economic development are called agents. In thisIn this case, we are talking about an organization or a person working on behalf of someone, business institutions performing tasks. The existing functions are transferred to the subjects directly by the economic system. And its features, in turn, determine the specifics of their work. For example, a commercial enterprise (corporation, partnership) produces products for their subsequent sale on the commodity market in order to generate income. Accordingly, it acts as an economic entity. Along with this, non-profit societies can also exist. They can also be engaged in the production of products, but for their own consumption. These subjects of the economic system act as participants in the non-market sphere.

Home improvement

It has the ability to make decisions about the quality and quantity of consumption of existing goods, about the sources of profit for their acquisition. Households act as suppliers and owners of production factors. These include:

• Workforce.
• Money resources.
• Products of subsidiary farming.
• Real estate, land and so on.

An individual can act as a household if he lives alone and carries out, for example, the production of agricultural products (farmer). As it can be considered a community, a family, and so on. The main feature in this case will be housekeeping.

Specifics

Households, like other economic entities, act as both sellers and buyers. In particular, they are sellers (tenants) in the market of production factors. First of all, in this case, they sell the ability to work. In addition, these economic entities may lease free capital or property. This is how they make a profit. From the income received, the consumer budget of households is formed. As a rule, salary is the basis of profit. It is a factor income, the value of which varies with productivity. The household distributes profit between savings and current consumption.

Enterprise

This economic entity is a legal entity that operates to create and produce goods (products), perform work and provide services. In other words, the firm decides to release goods for sale based on the exploitation of resources that are at its own disposal, as well as acquired in the factor market. Households, the state, other companies, including foreign ones, act as consumers of services and products created by the enterprise. The source of a firm's work is its revenue. It includes compensation for the costs of issuing goods, as well as profit through which further economic activity is carried out.

Features of the enterprise

Payments made by a firm upon acquisitionfactors of production act as its costs. Together with this, they form the streams of wages, interest, rent and other things. In the markets for finished goods, this economic entity creates an offer. In this case, he acts as a seller who develops a certain pricing policy in accordance with existing conditions. The profit that the company receives is partially transferred to the state in the form of taxes, deducted to shareholders (in case of a corporate type of organization) in the form of dividends, and also directed to the expansion of production (invested).

Compulsory payments

Every economic entity must pay taxes. They can be direct or indirect. The first are taxes, which are paid directly on profits. Indirect deductions are made even in cases where the enterprise does not receive income. They are included in the cost of production. Such taxes, in particular, include customs duties, VAT, excises, etc. At the same time, the state provides certain benefits to enterprises. Firms can receive a subvention, a subsidy, a subsidy. Using these funds, the state implements an economic policy aimed at regulating the activities of enterprises existing in the country.

Property Forms

Depending on them, there are different types of companies. The individual form acts as the basis for the formation of a family or private enterprise. The collective type of ownership is inherent in partnerships, partnerships, companies (LLC, CJSC). There are also state and municipal forms. They are typical for non-profit, unitary enterprises and organizations (unions, foundations and others).

State

It is also considered as an economic entity. Its key function is the issue of money. It is implemented through the Central Bank. The Central Bank, being a state organization, also regulates financial flows. In commodity circulation, the state can be both a buyer and a seller. In the market of production factors, this economic entity acquires all the resources necessary to ensure the functioning of its structures. Acting as a seller or lessor, the state sells or lends for temporary use the products produced by state-owned enterprises. In addition, it collects taxes from other economic entities, provides them with benefits, guarantees, subsidies, subsidies.

Public policy directions

As the key regulator of the economy, the activities of the government are considered both at the macro and micro levels. The policy of the state should be focused on maximizing the national welfare in conditions of rather limited opportunities. Within the framework of microeconomics, an analysis is made of the impact of the government on specific subjects: producers, buyers, sellers, etc. At the macro level, its impact on inflation, entrepreneurial activity, unemployment, and so on is assessed.next.

Key tasks of the government

A number of functions that the state implements are focused on maintaining and developing the economy. These include, in particular:

1. Ensuring the regulatory framework and creating a social environment that promotes the efficient functioning of the market.
2. Protecting competition.
3. Ensuring the redistribution of income and benefits.
4. Stabilization of the economic situation. This task involves controlling the level of employment and inflation, stimulating productivity growth.
5. Adjusting resource allocation to change the structure of the national product.

Implementation of the state program

The tasks of ensuring the regulatory framework for a market economy are solved by introducing certain rules of conduct. All manufacturers should be guided by them when interacting with consumers. Regulations approved by the government concern the definition of the scope of the distribution of property rights, the regulation of relations between firms, and the prohibition of the sale of counterfeit medicines and products. Legal documents also define standards for labeling, product quality, liability for non-compliance with contractual terms, etc.

Conclusion

In stable states, governments develop and implement social security programs, set minimum wages and unemployment benefits. The state strictly controls the price level,fixing them to increase the income of a number of categories of citizens. Ensuring equality, free competition, creating conditions in which all subjects of the economic process could realize their potential are considered the main tasks of the government. For their implementation, a variety of programs are being developed. At the same time, the state should contribute to the replenishment of the budget. For this, differentiated tax rates are established. Using economic and financial instruments, the government regulates the distribution of profits through direct and indirect intervention in the functioning of the market structure. Due to the existing system of taxation, as well as thanks to public spending on social security, an increasing part of the national income is directed from the relatively rich participants in the turnover to the relatively poor. In this process, however, the key role belongs to households and enterprises. They act as a source of budget revenues. Producers produce goods, provide services and perform works, providing society with the necessary benefits.