Households and Individuals Activity v. Multinational Corporations and Governments Activity
Economics studies how limited resources are used by people to satisfy their needs and wants. The resources available are scarce but the wants of people are unlimited. Therefore, nations and individuals need to make decisions about how their resources would be allocated in an efficient manner to be able to obtain maximum satisfaction of their own wants. Economics as a social science deals with peoples activities and specializes in the production, exchange, distribution, and consumption of wealth or desires and material needs of human beings.
The science of economics is composed of microeconomics and macroeconomics. Microeconomics considers how individual industries, consumers, and firms behave with the aim of analyzing market mechanisms that help to establish relative prices of goods and services and ensure they allocate resources in the society among many alternative uses. Microeconomics analyzes failure in the market if the market is not able to maximize its welfare and describes theoretical conditions needed to get perfect competition.
Macroeconomics studies individual economic decisions and considers aggregate behavior. It analyzes how it can be able to influence policy goals of government such as price stability, economic growth, full employment, and balance of payment which is sustainable. (Hodgson, 2000 pp34-37)
Households consume goods to increase utility because the goods consumed are able to satisfy their needs and wants. These goods are sold at a price that is set in the market and are sold at a positive price where the purchaser considers utility obtained from the purchase of goods as being more valuable than the money. Households consider goods as physical products that are able to be delivered to a person who is willing to purchase and there is the transfer of ownership to the customer from the seller.
Multinational Corporation is an enterprise that helps to manage production establishments and deliver its services in two or more countries. Large multinationals’ budgets exceed the budgets of many countries and have a great influence on local economies and international relations. Important globalization role is played by Multinational corporations and some of them have an argument that there is a new form of Multinational Corporation that is evolving to respond to globalization.
Advocates of Multinationals have said that they are able to create wealth and jobs and ensure there is improved technology in countries that need development but the critics say that Multinationals have can have undue political influence on the government and exploit developing nations and create a loss of jobs in their home countries. Limited liability is an important corporation aspect where shareholders have the right to participate in profits through appreciation of stock of dividends but can not be held personally liable for debts of the company. (Clement, 2004 pp13-16)
The government ensures that industries are established for economic gain and the promotion of employment. This involves many activities such as farming, manufacturing, and tourism where production is at any scale and in a restricted sense by the use of machines. Industrialization is asocial and economic change process where human society is being transformed from a pre-industrial to an industrial state. Social and economic change is intertwined with technological innovation through developing large-scale production of energy. (Hausman, 1992 pp13-15)
References
Hausman D. (1992): The inexact and separate science of economics: Cambridge University Press, pp. 13-15.
Hodgson B. (2000): methodology of economics as a science: Springer, pp. 34-37.
Clement O. (2004): The science of economic development and growth: M.E. Sharpe, pp. 13-16.