Types of Economic Actions & How to Apply them in the Business World
In the business world, every decision taken by business people can have a significant impact on the progress of the business. For example, an owner’s decision not to restock his merchandise for inventory the following week prevents the business from running smoothly due to shortages of goods.
Nobody can predict turmoil in the business world accurately. This is the reason why every strategic decision taken by a business leader has an enormous impact on the future of the business. Recognizing this, business leaders must be accustomed to considering every decision and have the ability to execute it into appropriate economic action.
Economic action is a human action that is driven by efforts to meet a physical need to achieve prosperity. Economic action can occur if the action is done by considering the sacrifice and the results to make the right choice in meeting a need. Here are the types of economic actions and how to apply them in business.
Rational Economic Action
One type of economic action that is based on the best and most beneficial choice so as to improve its economic life. The word rational has a logical or logical meaning or reason. This rational action is needed by humans both in a daily life or in doing business. This rational consideration starts from a small thing to a big thing.
Examples of the application of rational economic actions in a company are to determine the right type of production so that all products can be sold to the maximum, reduce production costs rationally without reducing product quality, use skilled labor, use raw materials and help efficiently, determine distribution systems right, and do promotions.
Irrational Economic Action
Irrational economic action is one type of economic action in which a person or company has a favorable estimate without taking into account rational factors but in reality is actually detrimental. Individuals and companies that act irrationally usually do not consider the cost, time, and labor costs.