Impact Of Economics On Business

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Introduction In order to understand the effect on economics on the business, it is important to understand its definition. Economics is ‘the social science that studies the choices that individuals, businesses, governments and entire societies make as the cope with scarcity, the incentives that influence those choices, and the arrangements that coordinate them (Sullivan, 2011).’ This paper will discuss the impact of product liabilities on the business. Because economics impacts our daily lives, it is important to understand how the goods being provided satisfies our needs. The factors of macro and micro economics, which are 2 sections of economics and the effect on business, will also be discussed. Factors of Microeconomics In microeconomics,…show more content…
Some of these are: the economy, the government (interest rate, inflation, change in policies and regulations). These factors directly impact the production and operations of a company. Economic Status. The economic factor is very important in determining the ‘…business strategy in the organization for formulating, implementing and controlling…(Verma, 2012),’ operations. The change is consumer’s income affects the sales and production of goods. For example, an increase in income snowballs into easy access of a credit line, which then increases production of goods and sales. On the other hand, if a business is having difficulties getting a credit, the operations of the business is greatly affected: spending is reduced, goods production is greatly reduced and people lose their jobs. This is one of the reasons why ‘…money market…has been closely monitored by both central banks and analysts (Dewachter & Iania,…show more content…
In this case, the business was proved to have carelessly produced a product that resulted in an injury. This negligence usually happens in the production phase, where a product is not properly assembled, tested and checked for quality prior to releasing the product into the market. Misrepresentation. A company can be sued if the released product has been misrepresentation or false information has been provided regarded the product and the user was injured as a result of the representation. Companies must provide warning labels on their products. Failure to do so can be construed as misrepresentation of the product and lead to civil action being taken against the company. Strict liability. Strict liability ‘…makes manufacturers, distributors, wholesalers, retailers and others in the chain of distribution of the defective product liable for the damages caused by the defect (Sullivan, 2011).’ABC complete Kitchens must carefully consider partnering with businesses to distribute their products, as that can constitute a liability for the
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