Economic entities are individuals or social groups that study the world and its objects and act on them in the process 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 into practice their skills, are responsible for the results of their work. Let us further consider their specifics.
general characteristics
Today, the activities of all economic entities are quite specific. It depends on the role that they play in certain historical conditions, which is distinguished by relative isolation, the presence of models of rational behavior, independence and established rules. In a number of sources, subjects of economic development are called agents. In this case, we are talking about an organization or a person working on behalf of someone, business institutions performing tasks. Existing functions are transferred to subjects directly by the economic system. And its features, in turn, determine the specifics of their work. For example, a commercial enterprise (corporation, partnership) carries out production for its subsequent sale on the product market in order to generate income. Accordingly, it acts as an economic entity. Non-profit societies may exist along with this. They can also engage in the production of products, but for their own consumption. These entities of the economic system act as participants in the non-market sphere.
The household
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:
- Labor power.
- Cash resources.
- Subsistence farming products.
- Real estate, land and so on.
An individual person can act as a household if he lives alone and carries out, for example, production of agricultural products (farmer). As it can be considered a community, family and so on. The main feature in this case will be household management.
Specificity
Households, like other economic entities, act as sellers and buyers. In particular, in the market of production factors, they are salesmen (tenants). First of all, in this case, they sell the ability to work. In addition, these economic entities may lease free capital or property. Due to this, they make a profit. The consumer budget of households is formed from the income received. The basis of profit, as a rule, is salary. It is a factor income, the value of which varies, depending on productivity. Households distribute profits between savings and current consumption.
Company
This economic entity is a legal entity that functions to create and produce goods (products), perform work and provide services. In other words, the company makes a decision on the release of goods for sale based on the exploitation of resources that are at its own disposal, as well as acquired on the market factors. The consumers of services and products created by the enterprise are households, the state, other companies, including foreign ones. The source of the company’s work is its revenue. It includes compensation for the costs of the production of goods, as well as profit, through which further economic activity is carried out.
Features of the enterprise
Payments made by the company upon the acquisition of production factors act as its costs. Along with this, they form the flows of salary, interest, rent and other things. In the markets for finished goods, this economic entity creates a proposal. In this case, he acts as a seller, developing 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, paid to shareholders (with the corporate type of organization) in the form of dividends, and is also used to expand production (invested).
Obligatory payments
Each economic entity must pay taxes. They can be direct or indirect. The first are taxes that are paid directly from profits. Indirect deductions are made even in cases where the company does not receive income. They are included in the cost of production. Such taxes, in particular, include customs duties, VAT, excise taxes, etc. Moreover, the state provides certain incentives to enterprises. Firms can receive subventions, subsidies, subsidies. Using these funds, the state implements an economic policy aimed at regulating the activities of enterprises existing in the country.
Forms of ownership
Depending on them, different types of companies are distinguished. 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, societies (LLC, ZAO). There is also a state and municipal form. They are characteristic of non-profit, unitary enterprises and organizations (unions, foundations, and others).
State
It is also regarded as an economic entity. Its key function is the issue of money. It is implemented through the Central Bank. The Central Bank, as 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 provides for temporary use products that are produced by state enterprises. In addition, it collects taxes from other economic entities, provides them with benefits, guarantees, subsidies, subsidies.
State policy directions
Acting as a key body for regulating the economy, government activity is considered both at the macro and micro levels. State policy should be focused on maximizing national welfare in the face of fairly limited opportunities. Within the framework of microeconomics, an analysis is made of the impact of the government on specific subjects: producers, purchasers, sellers, etc. At the macro level, its impact on inflation, entrepreneurial activity, unemployment, and so on is evaluated.
Key Government Objectives
A number of functions that the state implements are focused on maintaining and developing the economy. These include, but are not limited to:
- Providing a regulatory framework and the formation of a social atmosphere that contribute to the effective functioning of the market.
- Protection of competition.
- Redistribution of income and benefits.
- Stabilization of the economic situation. This task involves monitoring the level of employment and inflation, stimulating productivity growth.
- Adjustment of the distribution of resources in order to change the structure of the national product.
Implementation of the state program
Tasks to ensure the regulatory framework of a market economy are achieved through the introduction of certain rules of behavior. They should guide all manufacturers when interacting with consumers. Regulations approved by the government relate to the definition of the scope of property rights, the regulation of relations between firms, the ban on the sale of counterfeit medicines and products. Legal documents also define standards for labeling, product quality, liability for non-compliance with contractual conditions, etc.
