People make decisions about things in their lives everyday. In its most simplistic form, these decisions, and the study of their relating trends, are the basis for the economics academic discipline. Economics seeks to develop an understanding of information relating to these decisions on many levels. Your decision to eat an apple for lunch, a corporate decision to invest billions of dollars, and a government decision to reduce tax costs are all examples of economics. Or in other words, economics studies the decisions that are made in relation to resources in our everyday lives.
The study of economics begins with the terms scarcity and choice. Because not everything is available to everyone all of the time, we have to make decisions and prioritize our resources. Scarcity is the concept that there is a limited amount of an item that is sought after by an unlimited amount of want. To say it another way, there is a limit to how many apples you can buy, carry, and eat at lunch. Like all goods and services, apples become scarce and choices have to be made.
Goods and services are the two basic components in the economic system. Goods are tangible items that are produced, sold, transported, consumed, or saved. The apple is a good. On the other hand, there are services. Services are activities performed by others for trade. For example, an auto mechanic knows how to fix cars. You do not know how to fix cars. As a result, you trade your money for the auto mechanics service. A service is not a product or a tangible item that you purchase and possess. The service is an activity that is performed that you could not otherwise perform on your own.
By studying how goods, services, money and other factors of production operate, economists can make predictions about peoples' behavior. These predictions are utilized to make investments, decisions about pricing, changes to supply, and many other economic strategies. The most successful entrepreneurs have a solid understanding of the economics discipline.
The study of economics begins with the terms scarcity and choice. Because not everything is available to everyone all of the time, we have to make decisions and prioritize our resources. Scarcity is the concept that there is a limited amount of an item that is sought after by an unlimited amount of want. To say it another way, there is a limit to how many apples you can buy, carry, and eat at lunch. Like all goods and services, apples become scarce and choices have to be made.
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