Principles of Economics
Maslow’s Hierarchy of Needs
Maslow’s physiological needs are the basic human needs that depend on satisfaction for survival. (The most important statement is that they are innate, unlearned, and intuitive.)
- Security: These needs serve as extra consolidation obtained from the moment of safety, so that the individual feels safe and protected.
- Social: These needs are related to the individual’s emotional development and the need for social association.
- Esteem: These needs affect the individual’s self-confidence. They can be of two types: those relating to self-esteem and those associated with reputation.
- Self-actualization: This consists of achieving ideals or goals proposed by the individual.
Characteristics of a Self-Actualized Person
- Clear perception of reality
- Accepts themselves without shame or guilt
- Spontaneous and open to new experiences
- Independent and autonomous
- Creative and original
- Enjoys solitude and privacy
- Values good interpersonal relationships
- Good sense of humor
- Non-aggressive and moral
Classification of Companies
By Area of Business Activity
- Primary Sector: Companies that work directly with natural resources.
- Secondary Sector: Companies dedicated to industrial activities or processing.
- Tertiary Sector: Companies whose fundamental function is to provide a service.
According to their Size
- Micro: Up to 10 employees
- Small: 10 to 50 employees
- Medium: 50 to 250 employees
- Large: More than 250 employees
According to Ownership
- Public Companies: Their capital belongs entirely to the state, communities, or other public autonomous institutions.
- Private Companies: Their capital belongs to individuals.
- Mixed Companies: Part of their capital belongs to a public entity and the rest to individuals.
Depending on the Area of Operation
- Local
- Regional
- National
- Multinational
Economic Sectors
Primary Sector
Firms in the primary sector perform activities directly related to natural resources. This sector includes agriculture, livestock, fisheries, and logging.
Characteristics:
- Production varies greatly from year to year.
- Working with living beings.
- Many of the products are perishable.
Secondary Sector
The secondary sector comprises companies involved in the transformation of raw materials into consumer goods or capital goods through physical or chemical processes. This sector includes industrial activities, the energy sector, and construction.
Tertiary Sector
This sector includes heterogeneous activities such as transport, telecommunications, commerce, hospitality, health, and education.
Causes of Growth in the Tertiary Sector:
- Incorporation of women into the labor market
- Increase in purchasing power
- Booming tourism
- Increase in the services provided by the public sector
Factors of Production
Land
Nature offers a wide range of resources used in the production process, such as arable and developable land, oil, and water. These resources can be classified as renewable and nonrenewable.
Labor
Human activity, whether physical or intellectual, used to produce goods or provide services in exchange for payment.
Capital
We can distinguish three types of capital:
- Physical Capital: All elements employed in production.
- Human Capital: Everything that contributes to raising the productive capacity of human beings.
- Financial Capital: Available funds for the purchase of physical capital or a financial asset.
Capital is a set of real assets that contribute to the development of economic activity, helping to produce other goods and services.
Economic Systems
Market Economy
Advantages:
- Economic agents can freely choose to consume and produce according to their preferences and availability.
- Price system governs shortages and surpluses.
- Efficient production system with incentives.
Disadvantages:
- Unequal income distribution.
- Market failures.
- Cyclical system instability.
Centralized Planning
.- .- vntajas high employment levels d – d the population basic needs covered – egalitarian income distribution d. Incnv .- dprevision-missing errors d incntivos – excessive bureaucracy, inefficiency, high levels d – d reaction limited capacity adaptabilididad id. Vntjs Eco mixt .- .- d action xra freedom cnsumidores i manufacturers – xra the state can intervene to correct market imbalances dl . Kn .- Incnv the same the other 2 sistmas, specific gravity dpndiendo k dl tnga state i d each country market. Property types .- .- .- according to their materiality goods and services. Caracas .- according to their free and inexpensive. s eco classified by function .- .- d consumer goods and capital. according to their degree d .- Intermediate and final elaboration. sgn their relationship other goods .- cn complementary, substitute and independietes. .- sgn its private and public consumption. Div .- d the positive economic science econ .- ka studies what was or could be, d objectively analyzes economic phenomena as an happened. s subdivided into economic theory .- Studies cn the high grao exos d abtraccion i generality: Micro .- s studio occupies dl l economs agents cmportamnto d indiv. theories one cjnto d sn k common aim to help the process by cmprender cula s allocate scarce resources to alternative uses as well as the role d i the market prices. Macro studies the performance .- d the whole economy around the goal d cn get a simplified vision of eco d xro ns ka allow both know i act on the activity level eco d d d cnjntos a country or countries. THE s GDP measures the magnitude k d prodccion goods country i Durnten servivcios d 1 d 1 periodof time determndo. echo applied the exos cn .- Studies minor degree d greater abstraccn i dtalle. Eco normative .- k study what actions should be i recmienda xra intntar improve reality.