- Define scarcity
- Understand opportunity cost
- Understand the difference between microeconomics and macroeconomics
What Is Economics?
A business’s success depends in part on the economic systems of the countries where it is located and where it sells its products. A nation’s economic system is the combination of policies, laws, and choices made by its government that influence what goods and services are produced and how they are allocated. Economics is the study of how a society uses scarce resources to produce, distribute, and consume goods and services.
scarcity
Scarcity means that human wants for goods, services and resources exceed what is available. Resources, such as labor, tools, land, and raw materials are necessary to produce the goods and services we want but they exist in limited supply. Because of scarcity, we have to make choices about what to do with our limited resources.
Every economy is concerned with what types and amounts of goods and services should be produced, how they should be produced, and for whom. These decisions are made by the marketplace (buyers, sellers, and stakeholders), the government, or both. In the United States, the government and the free market system together guide the economy.
How Entrepreneurs React to Scarcity
You can view the transcript for “I Turned This Cash-Only Savings Hack Into An $850K Business” here (opens in new window).
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