Businesses provide goods and services that drive economic output, according to About.com. The law of supply and demand dictates that companies can step in and begin producing products if an economy is not able to produce high-demand goods to satisfy the public.Continue Reading
Supply and demand also works when prices fall due to lack of demand from the public, About.com states in an article adapted from the U.S. Department of State. This causes businesses to fail or switch to manufacturing other goods. This is known as a market economy, which is different from a socialist economy, an economic system whereby the government plays a more central role in the economy.
Small businesses in particular foster economic growth by hiring people, and large corporations benefit from the productivity of smaller companies, according to the Houston Chronicle. Successful small businesses also contribute to communities by paying taxes. Some small businesses morph into larger companies that participate in the national and international markets.Learn more about Financial Planning
Cornerstone Financial provides services such as estate planning, employee benefits, investments, retirement income solutions, business planning and insurance. The company provides many types of insurance including long-term care and medical insurance, Medicare supplement, tax reduction planning, disability and salary continuation, and wealth transfer, according to Cornerstone Financial.Full Answer >
In economics, profit maximization refers to the process by which a business assesses the price and output of goods in order to ensure the greatest profit. During the assessment, businesses will determine the expense of fixed and variable costs during production in order to ascertain financial viability. There are two main ways a business achieves this total revenue-total cost and marginal revenue-marginal cost.Full Answer >
Labor productivity is determined by dividing the output, or total amount of goods or services produced, by the number of workers. Labor productivity is used to measure worker efficiency.Full Answer >
Equilibrium GDP occurs when the output level, which is the total amount of goods and services produced, is exactly equal to the total amount of goods and services purchased. It is the level of GDP where aggregate supply and aggregate demand are equal.Full Answer >