Economic Decision Makers

Case study by: Zia Aufar Rahman

The economic decision makers are divided into: The Household, the Firm, Nonprofit Institution and
the Government

a. The Household

The household have a staring role in market economy and become the source of demmand for
goods and service,supliers of labor,capital,and natural resources, become the source of market
choice and acts as a single decition maker, maximizes they utility

The reason household have such a role in the market is becouse they provide essential factor to
service the firms from the household being the source of labor, demand, and since households
contribute govermental revenue by paying taxes,an

for example is products from the so klin a product that is from wings group indonesia wich is
placed in jakarta, where products are demanded by households for their need in cleaning and are
produced by the labor of households due to the fact that the house is the central living space for
people.

And since households are the source of demmand the household they have the rights to choose
what resource to buy, and that is because the limit of resurces the households have and vast
demmand of the household thus the household will make decision for wich to buy to maximze their
utility.

And the goods and service that they demand are of three things:

durable goods such as furniture(sofa, chair, table) vehicles(cars, bikes,etc. )

nondurable goods like food and beverages(rice, meat, milk)

services like education and Healthcare

b. The Firm

Firms are economic units formed by entrepreneurs who combine labor, capital, and natural
resources to produce goods and services to gain profit. Since it is assumend that the household is
assumed to amximize utility that the firm is assumed to maximize profit, and they do that by finding
the right balance between revenue and cost and they does it by using various of methods:

By having the margunal evenue (MR) where the additional ervenue into marginal cost wich
makes their additional revenue wich makes more profit. Balancing between the price to increase the
demand but still is enough with the avaleble resources, doing smart selling for example is by offering
related products that is connected with the customers demmand to increase the sales, increase the
the lifetime value of the customer by valuing loyal customers and cutting there cost to make them
more connected.

Industries such as pt.Batik Keris an industry that is focused on producing batik a textile that is
localy found in indonesia, the industry gain profit by producing product wich when sold the revenue
will be more to fill the cost of production cost and the cost of labor then it will be profit, and and by
balancing the price of the batik products so it will not be so high to more attract customers but also
not so low to gain more revenue to fill the cost, and doing smart selling by having maching styles for
the whole family to increase the chance for more sales and folling many national agenda to promote
their product like indonesiaku fashion show, gelar budaya pelangi, national batik day 2017,etc. and
making their customer more connected by giving them bonuses like for evrey Rp 500,000 or more
purchases there will be given a free CD of senandung hati untuk negeri.

There are many types of firm the main consist of three things: sole proprietorship wich is the
majority, partnership, and coporation wich makes the most sales

Sole proprietorships are firms that are owned by an individual that have the full rights and
complete control of the company and the rest are the emplyee of the owner, an example of this is
the meatball soup restaurant Ca’met in Sidoarjo owned by Mr Slamet Aji Prasetyo whe Mr Slamet
cooks sell and serve in the restaurant and he is responsible for all of the decisions made, keeps all
the profit but also liable for all debts.

Parnerships are firms with multiple owners wich shares their profits an exaple is provival shoes
wich are founded by two people wich is they share thir profit and tasks wich is followed by their
agreement.

And corporations are firms that is not owned by the founder of the company but to the
stockholders and faces double taxes the tax of the stockholders and the tax on profit an example of
this is apple inc a publicly traded corporation, and the shareholders own a part of the company.

These corporations have such a big roles in the business wold because of many fators, the
shareholders have protected personal assets, and it can raise a large ammount of capital by selling
shares to the public, and unlike other firms the corporations can last even if the owners change,etc

c. Nonprofit Institutions (NPO)

These are organisation operated for a collective or social benefit and not to generate profit as
their general goal. A organisations like yayasan cinta snsk bangsa (YCAB foundation) a nonprofit
intituton founded in the 1999 in jakarta by Veronica Colondam that is focused on taking care of the
unprivilaged young ones in indonesia that does not have the goal to gain any profit from their work.

This foundation have created learning centers, microfinance, learning houses,etc for the
childern of indonesia and and are currently focusing on the education, lifestyle and the economic
skills of the young ones.

d. The Government

Besides form law and national defense the government also play a role in the market
one of wich is market failuers in case of markets don’t efficiently allocate their resources due to
monopolies and externatilies the government will intervene to correct or migitate the
inefficiencies,enforce laws and regulations to the market and to the monopolies be a provider of
goods gives more equal distribution.
 A popular case in this state is the case of companies who were given market failures due
to their polluting of the citarum river the big companies are like PT kahatx, PT insan sandan
internunsa and PT five star textile were strict out of their waste removement.

e. The rest of the world

Wich are foreign decicion makers wich are households and firms and goverments across the
globe that connects to each other via international trade.

People do international trades because the internaational trade serves a comparative advantage
wich is the ability to produce a lower cost then other producers, like the company of honda a japan
company that is in indonesia wich carries out international trade there due to the fact that the
material cost in indonesia is lower and the demmand of vehicles are higher.

Although international trade carries a restiction such as Quota and tariff,quotas are the limit of
the ammount of products can be imported and exported in a certain period while tariff are the cost
of a product to be imported or exprted thus increasing the price of the product.for instance is honda
have the quota of 10,000 vehicle to import then honda canot import more until the next quota, and
the tariff is about 2,5 percent so ithe price of the vehicle will inflate about 2,5 percent