The document discusses the role of businesses in the economy. It states that businesses allow for specialization of production and economies of scale, which lower costs. They also coordinate trade and commerce through markets. Markets allow buyers and sellers to discover information and exchange goods and services voluntarily. This benefits consumers by providing access to desired goods and services and transmitting price information. It increases standards of living by enabling specialization and trade beyond self-sufficiency. Businesses thus play a key role in production, trade, and economic growth.

1. ORGANIZATION AND MANAGEMENT
COMPETENCY CODE: ABM_AOM11-Iac-d-7

2. ORGANIZATION AND MANAGEMENT
THE ROLE OF BUSINESS IN THE ECONOMY
COMPETENCY CODE: ABM_AOM11-Iac-d-7

3. ORGANIZATION AND MANAGEMENT
ACTIVITY:
With your group, present a pantomime of your usual
activities during weekends. Five (5) minutes for
preparations, three (3) minutes for presentation.
Rubrics:
Clarity : 30%
Acting : 30%
Content : 40%
Total : 100%

4. ORGANIZATION AND MANAGEMENT
What if businesses are not present in
the economy?

5. ORGANIZATION AND MANAGEMENT
The Role of Business in the Economy
1. Market
- A market is a social arrangement that allows buyers
and sellers to discover information and complete
voluntary exchanges of goods and services.

6. ORGANIZATION AND MANAGEMENT
The Role of Business in the Economy
1. Market
- Markets allow you as a consumer to purchase the
goods and services that you want. Through
markets, information is transmitted between buyers
and sellers about:
1) the goods and services desired by consumers,
and;
2) the price of those goods and services.

7. ORGANIZATION AND MANAGEMENT
The Role of Business in the Economy
1. Market
- Markets allow you as a consumer to purchase the
goods and services that you want. Through
markets, information is transmitted between buyers
and sellers about:
1) the goods and services desired by consumers,
and;
2) the price of those goods and services.

8. ORGANIZATION AND MANAGEMENT
The Role of Business in the Economy
1. Market
- Markets bring consumers and producers together to
coordinate the exchange of resources. Both the
buyer and seller must stand to gain from the trade
or else the transaction will not occur.

9. ORGANIZATION AND MANAGEMENT
The Role of Business in the Economy
1. Market
Adam Smith’s “Invisible Hand” Concept
- Smith’s Laissez Faire doctrine states that the
market is a free market where the producers and
consumers act in accordance to their own interest.
“Give me that which I want, and you shall have that
which you want”

10. ORGANIZATION AND MANAGEMENT
The Role of Business in the Economy
2. Coordinating Trade and Commerce
- Commerce is an act of trading something of
economic value such as a good, service,
information, or money between two entities.

11. ORGANIZATION AND MANAGEMENT
The Role of Business in the Economy
2. Coordinating Trade and Commerce
- Trade is what increases our standard of living.
Instead of having to produce everything that you
consume on your own, you are able to trade with
others and obtain a higher quality of life.

12. ORGANIZATION AND MANAGEMENT
The Role of Business in the Economy
3. Product or Service Specialization
- Businesses bring “specialized” people, equipment,
and other resources together and coordinate the
production of goods and services.

13. ORGANIZATION AND MANAGEMENT
The Role of Business in the Economy
4. Economies of Scale
- When more units of a good or a service can be
produces on a larger scale, yet with (on average)
less cost input cost, economies of scale are
achieved.

14. ORGANIZATION AND MANAGEMENT
The Role of Business in the Economy
4. Economies of Scale
- This means that as a business grows and
production units increase, a business will have a
better chance to decrease its cost.

15. ORGANIZATION AND MANAGEMENT
The Role of Business in the Economy
5. Positive and Negative Externalities
- An externality is defined as a benefit or cost that is
imposed on a third party, such as society, other than
the producer or consumer of a good or service, or,
more simply, an economic side effect.

16. ORGANIZATION AND MANAGEMENT
The Role of Business in the Economy

17. ORGANIZATION AND MANAGEMENT
[ end of lesson ]