Business Economics

Business Economics
Mrs. Tobe

Review of Economics
Economics is the social science that studies the production, distribution, and consumption of goods and services. Scarcity Ever-present situation in all markets whereby either fewer goods are available than the demand for them, or only too little money is available to their potential buyers for making the purchase. This universal phenomenon leads to the definition of economics as the "science of allocation of scarce resources. Individuals, families, businesses, and government all face this basic economic problem.Economizing practicing economics; that is, avoiding waste or reducing expenditures. For example, your mother buys the larger, more concentrated laundry detergent in order to economize.Opportunity cost the best alternative that is forgone because a particular course of action is pursued. For example, buying an expensive iPod Nano means you'll have less money to spend on fun weekend activities.

Review of Economics
Trade-off an exchange of one thing in return for another, especially relinquishment of one benefit or advantage for another regarded as more desirable. For example, you want both a new outfit and a new and a class ring. You forgo the outfit for something that will last longer.Consumption Expenditure during particular period on goods and services used in satisfaction of needs and wants. Production Processes and methods employed in transformation of tangible inputs (raw materials, semi-finished goods, or subassemblies) and intangible inputs (ideas, information, know how) into goods or services.Producer someone who produces or manufactures something.Exchange reciprocal transfer of goods or services from one entity to another.Distribution in economics, the movement of goods from manufacturer, or a way in which wealth is shared in any particular economic system.

Review of Economics
Explain why wants are considered unlimited.People have unlimited amounts of items and things they wantPeople seem to want more then they have or can afford

Review of Economics
Discuss why scarcity exists.Fundamental economic problem that forces consumers and producers to use resources wiselyForces people and business to make choicesLimited resources to satisfy unlimited wants and needs

Review of Economics
Describe the three economic questions that all societies must answer.WHAT to produceHOW to produceFOR WHOM to produce

Review of Economics
Explain the importance of decision making in economics.Helps make good choicesHelps to identify and consider various alternatives and their consequences before making a final decision.Competition among businesses is intenseNeed to decide how best to use and conserve resources

Review of Economics
Describe economic activities.Production and distribution of goodsWays to measure economic activityGross Domestic Product (GDP)Standard of LivingUnemployment RateRate of InflationNational Debt

Review of Economics
Discuss the three factors that affect the value of money payments in a market economy.Scarcity, Utility, Wealth Example Water and diamondsDiamonds are scarce and have utility, they posses a value stated in monetary terms. Water has utility but is not scare enough. Less expensive, has a less monetary value than diamonds