{"id":2789,"date":"2023-02-19T16:10:49","date_gmt":"2023-02-19T16:10:49","guid":{"rendered":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/chapter\/learn-it-2-1-1-understanding-economics\/"},"modified":"2025-05-19T18:02:34","modified_gmt":"2025-05-19T18:02:34","slug":"learn-it-2-1-1-understanding-economics","status":"publish","type":"chapter","link":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/chapter\/learn-it-2-1-1-understanding-economics\/","title":{"raw":"Learn It 2.1.1: Understanding Economics","rendered":"Learn It 2.1.1: Understanding Economics"},"content":{"raw":"<section class=\"textbox learningGoals\">\r\n<ul>\r\n\t<li><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Define scarcity&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:15233,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:0,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:10}\">Define scarcity<\/span><\/li>\r\n\t<li><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Understand opportunity cost&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:15233,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:0,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:10}\">Understand opportunity cost<\/span><\/li>\r\n\t<li><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Understand the difference between microeconomics and macroeconomics&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:15233,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:0,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:10}\">Understand the difference between microeconomics and macroeconomics<\/span><\/li>\r\n<\/ul>\r\n<\/section>\r\n<h2>What Is Economics?<\/h2>\r\n<p>A business\u2019s success depends in part on the economic systems of the countries where it is located and where it sells its products. A nation\u2019s <strong>economic system<\/strong> 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. <strong>Economics<\/strong> is the study of how a society uses scarce resources to produce, distribute, and consume goods and services.<\/p>\r\n<section class=\"textbox keyTakeaway\">\r\n<h3>scarcity<\/h3>\r\n<p><strong>Scarcity<\/strong> 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.<\/p>\r\n<\/section>\r\n<p>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.<\/p>\r\n<section class=\"textbox example\">[videopicker divId=\"tnh-video-picker\" title=\"How Entrepreneurs React to Scarcity\" label=\"Select Video\"]<br \/>\r\n[videooption displayName=\"Cash Stuffing\" value=\"https:\/\/www.youtube.com\/watch?v=DrqcHOl48Oc&amp;t=320s\"][videooption displayName=\"Mexican American Candy\" value=\"https:\/\/www.youtube.com\/watch?v=FwxNRnnMh4g&amp;t=1s\"] [videooption displayName=\"Vending Machines\" value=\"\/\/plugin.3playmedia.com\/show?mf=9882514&amp;p3sdk_version=1.10.1&amp;p=20361&amp;pt=375&amp;video_id=OnfPWmOMgPk&amp;video_target=tpm-plugin-go2i58si-OnfPWmOMgPk\"]<br \/>\r\n[\/videopicker]<\/section>\r\n<p>You can view the <a href=\"https:\/\/course-building.s3.us-west-2.amazonaws.com\/Intro+to+Business\/transcripts\/ITurnedThisCashOnlySavingsHackIntoAn850KBusin.html\" target=\"_blank\" rel=\"noopener\">transcript for \u201cI Turned This Cash-Only Savings Hack Into An $850K Business\u201d here (opens in new window).<\/a><br \/>\r\nYou can view the <a href=\"https:\/\/course-building.s3.us-west-2.amazonaws.com\/Intro+to+Business\/transcripts\/BringingIn105KAYearMakingMexicanAmericanCandy.html\" target=\"_blank\" rel=\"noopener\">transcript for \u201cBringing In $105K A Year Making Mexican-American Candy\u201d here (opens in new window).<\/a><br \/>\r\nYou can view the <a href=\"https:\/\/course-building.s3.us-west-2.amazonaws.com\/Intro+to+Business\/transcripts\/HowITurnedVendingMachinesIntoA300KBusinessOnT.html\" target=\"_blank\" rel=\"noopener\">transcript for \u201cHow I Turned Vending Machines Into A $300K Business\u201d here (opens in new window).<\/a><\/p>\r\n<section class=\"textbox tryIt\">[ohm2_question height=\"400\"]3438[\/ohm2_question]<\/section>","rendered":"<section class=\"textbox learningGoals\">\n<ul>\n<li><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Define scarcity&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:15233,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:0,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:10}\">Define scarcity<\/span><\/li>\n<li><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Understand opportunity cost&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:15233,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:0,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:10}\">Understand opportunity cost<\/span><\/li>\n<li><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Understand the difference between microeconomics and macroeconomics&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:15233,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:0,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:10}\">Understand the difference between microeconomics and macroeconomics<\/span><\/li>\n<\/ul>\n<\/section>\n<h2>What Is Economics?<\/h2>\n<p>A business\u2019s success depends in part on the economic systems of the countries where it is located and where it sells its products. A nation\u2019s <strong>economic system<\/strong> 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. <strong>Economics<\/strong> is the study of how a society uses scarce resources to produce, distribute, and consume goods and services.<\/p>\n<section class=\"textbox keyTakeaway\">\n<h3>scarcity<\/h3>\n<p><strong>Scarcity<\/strong> 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.<\/p>\n<\/section>\n<p>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.<\/p>\n<section class=\"textbox example\">\n<div id=\"tnh-video-picker\" class=\"videoPicker\">\n<h3>How Entrepreneurs React to Scarcity<\/h3>\n<form><label>Select Video:<\/label><select name=\"video\"><option value=\"https:\/\/www.youtube.com\/embed\/DrqcHOl48Oc\">Cash Stuffing<\/option><option value=\"https:\/\/www.youtube.com\/embed\/FwxNRnnMh4g\">Mexican American Candy<\/option><option value=\"\/\/plugin.3playmedia.com\/show?mf=9882514&amp;p3sdk_version=1.10.1&amp;p=20361&amp;pt=375&amp;video_id=OnfPWmOMgPk&amp;video_target=tpm-plugin-go2i58si-OnfPWmOMgPk\">Vending Machines<\/option><\/select><\/form>\n<div class=\"videoContainer\"><iframe src=\"https:\/\/www.youtube.com\/embed\/DrqcHOl48Oc\" allowfullscreen><\/iframe><\/div>\n<\/section>\n<p>You can view the <a href=\"https:\/\/course-building.s3.us-west-2.amazonaws.com\/Intro+to+Business\/transcripts\/ITurnedThisCashOnlySavingsHackIntoAn850KBusin.html\" target=\"_blank\" rel=\"noopener\">transcript for \u201cI Turned This Cash-Only Savings Hack Into An $850K Business\u201d here (opens in new window).<\/a><br \/>\nYou can view the <a href=\"https:\/\/course-building.s3.us-west-2.amazonaws.com\/Intro+to+Business\/transcripts\/BringingIn105KAYearMakingMexicanAmericanCandy.html\" target=\"_blank\" rel=\"noopener\">transcript for \u201cBringing In $105K A Year Making Mexican-American Candy\u201d here (opens in new window).<\/a><br \/>\nYou can view the <a href=\"https:\/\/course-building.s3.us-west-2.amazonaws.com\/Intro+to+Business\/transcripts\/HowITurnedVendingMachinesIntoA300KBusinessOnT.html\" target=\"_blank\" rel=\"noopener\">transcript for \u201cHow I Turned Vending Machines Into A $300K Business\u201d here (opens in new window).<\/a><\/p>\n<section class=\"textbox tryIt\"><iframe 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