Economics Foundations.docx - Economics is the study of how...

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Economics is the study of how individuals and societies make choices under the condition of scarcity. Scarcity is a condition that exists when there are not enough resources to satisfy all of the competing uses. resources into four different categories—labor or human resources, land or natural resources, capital resources, and entrepreneurship, or the willingness to risk starting a business undertaking and skill to make the business successful Microeconomics is the study of how individuals, households, and businesses make choices. Macroeconomics is the study of the economy as a whole. Opportunity cost is the value of the next best alternative other than the choice that was made. production possibilities curve, which shows the maximum combination of two goods that can be produced when using all the available resources and the best technologies Direct costs can be linked directly to a product or service, such as the raw materials or labor required to produce the product or service. Direct materials and direct labor are the most common direct costs. On the other hand, indirect costs affect an entire operation rather than a specific product or service. Utilities, depreciation, office supplies, and rent are examples of indirect costs. Usually, such costs are called overhead . three basic economic questions: 1) What should I produce? 2) How should I produce it? 3) Who will buy the goods or services?

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