√ Definition of Economic Institutions, Characteristics, Functions and Examples (Complete)
Definition of Economic Institutions, Characteristics, Functions and Examples (Complete) – In this discussion we will explain about Economic Institutions. An explanation that includes the definition of economic institutions, the characteristics of economic institutions, functions economic institutions and of course examples of economic institutions which will be discussed in full and easily understood.
Definition of Economic Institutions, Characteristics, Functions and Examples (Complete)
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Definition of Economic Institutions
Economic institution is a rule or regulation that regulates the behavior of a person or collective in society in order to meet the needs of goods and services. Because humans are social beings who cannot be separated from the needs of a very complex life. To meet these needs, humans carry out economic activities which include production, distribution and consumption activities. This activity can be realized by establishing a company that can provide results/products that can be useful for basic human needs.
Characteristics of Economic Institutions
The characteristics of economic institutions are:
- Patterns of behavior / behavior: Frugal, professional and seeking profit
- Symbolic culture: trademarks, slogans, commercial songs, patents
- Benefit culture: factories, shops, blanks, forms
- Specialty Codes: Contracts, rights, monopolies, company deeds, licenses
- Ideology: Responsibility, liberalism, managerial, freedom of effort and labor rights
Functions of Economic Institutions and Examples of Economic Institutions
Economic institutions in everyday life have several functions, namely:
1. Regulating the Production of Goods and Services
Production is an activity or process of procuring goods and services used to meet the needs of human life. Production activities include increasing the use of goods, both directly and indirectly in the context of meeting the needs of many people's lives. The elements in the production process are production materials, capital, work force, and organizational management.
For example: A tempe factory produces 10,000 tempe per day to meet the demand for tempe in markets and vegetable stalls. Deep tofu producers need at least 500 kg more soybeans and several other operational tools. As actors in production, tempe entrepreneurs are willing to carry out economic activities, namely producing production goods in the form of tempe which will later be sold to consumers
2. Regulating the Distribution of Goods and Services
Distribution is the process of distributing goods and services originating from producers and channeling them to consumers. The process of distributing goods and services includes several parties that influence one another, namely producers, intermediaries (distributors) and consumers. To expedite the process of distribution of goods and services, various methods can be used, generally using economic exchange. Economic exchange is an activity of exchanging goods and services according to rules through provisions in cultural relations.
An important factor in the exchange of goods and services is the existence of transactions between individuals with one another.
a. The exchange system presents a possibility for someone to receive and give goods and services with various agreements that have been made by both parties.
For example: A tempe wholesaler buys 500 pieces of tempe each day from a tempe producing factory. Furthermore, these tempeh will be marketed in markets and stalls selling vegetables, or it could be itinerant vegetable vendors. This activity is an economic activity in the form of distribution of goods, namely tempeh.
3. Regulating Consumption of Goods and Services
Consumption is an activity of using goods and services either directly or indirectly by individuals or collectively to meet their basic/basic needs. Community members really expect a decent life, which is determined by the fulfillment of the availability of goods and services in terms of good quality and quantity. A decent life is very dependent on three factors including income, availability of goods and services, the value or price of goods and services.
Humans need unlimited goods and services, but limited human income. Little and limited income is inversely related to unlimited needs. This makes humans must be wise in managing their lives and must be planned.
For example: Every household has a mother who manages all needs according to the amount of income each day. To provide for the family's nutrition, the mother buys tempeh as a good source of vegetable protein for family nutrition. With a very affordable price, the need for protein nutrition can be fulfilled by consuming tempeh.
A mother has carried out economic activities, namely as a consumer who carries out the activity of regulating the consumption of goods and services.
Thus has been explained about Definition of Economic Institutions, Characteristics, Functions and Examples (Complete), hopefully can add to your insight and knowledge. Thank you for visiting.
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