Economy is a general measure for the efficiency, and/or for rational handling scarce resources. It generally as the relationship between reached result (output) and for it necessary employment of funds (input) is defined. Economy can be increased, by aiming at as favorable a relationship between Zielerreichung and employment of funds as possible and reached (see also among other things). Simplified expressed two basic principles apply to economy:

• Maximum principle: to reach with given resources the maximum result.
• Minimum principle: to reach the given result at minimum resources expenditure. (Thriftiness principle)

Practically the economy of an enterprise in three kinds can be determined:

• Comparison of nominal and actual values
• Comparison to other enterprises or measures (operating or measure comparison)
• Comparison between different times (time comparison).

Strongly simplified, particularly in the account system, economy is the relationship from monetary quantifiable costs and conversion. Thus a measure is economical, if the resulting conversion is higher within a certain view period, as the costs resulting for it.

This can be represented with the following index: \ mbox {economy} = \ frac {\ mbox {yield}} {\ mbox {expenditure}}

Here is

• Conversion (synomym: Proceeds) = the output of the provided goods and services evaluated in money.
• Costs = the consumption (input) from factors of production to the production and to the paragraph of goods, measured in money.

With same use of both alternatives the method of the static cost comparison calculation can be used.

In order appropriately to consider the course of costs and conversion with one of the above mentioned comparisons, dynamic procedures of the economy calculation are used: Present value method, annuity method and internal interest rate method.

With the present value method all payments of an alternative course of action on the decision time directly before the first payment of the base year abgezinst (discounted), this results in the so-called present value. In other words: The present value corresponds to the sum of all bar values of a course of action in the view period.

In the broader sense the calculation of production costs supplemental by qualitative, but not monetary representable effects (e.g. special urgency, strategic arguments, image improvement etc.). Such effects can be made methodically in an efficiency analysis assessable.

To economy as principle in the public administration see the contribution in on-line administrative encyclopedia

In the private sector usually not as large an economy, but as large a profit as possible is aimed at. This has consequences for the economy of the private sector (categorical clasping of the principle of economy after Erich good mountain) depending upon type of market. On the Mengenanpassermarkt striving for profit and striving for economy lead to identical results. Different it is e.g. with the monopolist, who limits the offered quantity and nevertheless - offering for uneconomic unit cost prices - its profit maximized.

See also

• Audit office

Related links

• On-line administrative encyclopedia: Economy

Literature

• Whe and Ulrich introduction to the general management economics, 22. Aufl., Munich 2005, 1200 S., ISBN 3800632543
• Volker Oppitz and Volker Nollau: Paperback economy calculation, Carl Hanser publishing house 2003, 400 S., ISBN 3446224637
• Volker Oppitz: Gabler encyclopedia calculation of production costs, Gabler publishing house 1995, 629 S., ISBN 3409199519
• Plinke: Industrielle cost calculation, 6. Edition, Springer publishing house 2002, 300 S., ISBN 3540428305

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