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Functions of Economic Institutions

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The existence of economic institutions in society due to human
meet their needs by conducting economic activity.
These activities led to an economic system, in which the system
economics is an effort to procure goods and services
ends meet. In an effort to gain
needs, in general, individuals perform actions
like real production, distribution, and
consumption of goods and services. Production activities are
activities that generate a number of goods and services.
Activity distribution of channel output
goods and services from production activities. Whereas
consumption is the use of production
goods and services by consumers in the community.
However, sometimes the implementation of the three activities in
above can have an impact on the environment and
community. For example, the occurrence of damage
environment, air pollution, soil and water,
changes in lifestyle communities around industrial centers,
and others.
Therefore, the establishment of economic institutions to manage
these activities for regularity and order in society
can still be maintained. In other words, economic institutions are
set of norms or rules that are intended to
meet the economic needs of society.
The functions of economic institutions in detail as follows.
a. Production of Goods and Services Settings
Production is an activity to make a
increasingly useful goods either directly or indirectly
directly to meet needs. For example,
fabric production. Thread rolling has nothing in it if it has not produced into a fabric. Each
production does not always produce the goods. Some
production processes to produce services, such as
banking, advertising, transportation, and others.
To make the production process required elements
production include natural, labor
(Human), capital, management, or organization.
This natural element that provides the raw material
or raw materials to be processed by humans.
The fact is growing awareness that
nature provides a huge relief against
production process. Labor is defined as
ability (power) or human efforts in the form
Physically and mentally that is used to improve
order a product.
Capital is the equipment or goods produced and can be
used to produce the next item. In the case
This capital is not the form of money. Capital goods can be
produced goods.
The organization is a factor that regulates the production of work
cooperation between the factors of production on a regular basis and rational
in achieving its objectives. The ability to run
organization can determine the level of production optimization.
All these elements require adjustment in production
utilized to improve the welfare of the community.
b. Distribution Function of Goods and Services
Through the distribution, individuals can enjoy the fruits of production.
In this case, the distribution is the process of distribution of goods and
services from producers to consumers. The person or institution
This activity is called the distributor. Activities
distribution must be done properly, orderly, safe, and fast.
If the distribution activities are blocked, both consumers and
manufacturers will suffer losses. Therefore, activities
distribution of goods and services as a whole is governed by
a system of norms that must be obeyed by the manufacturer and
consumers for each party to meet their needs
in a community environment.
c. Goods and Services Consumption Function
Consumption activities take place when someone uses
or use the goods and services to meet various
human needs. Consumption activities in a society
determined how much revenue generated
community. Through income communities are able to perform
economic activity. However, often occur in the inequality
between them which can cause problems. This
This is because the infinite nature of needs faced
with limited income. Therefore, it is necessary
norms and rules in consumption activities.


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