1. Choice-decisions and businesses.Businesses usually try to make money. Unless they are able to make enough money to cover their costs, they don't survive for very long. When they're

1. "Choice-decisions" and businesses. Businesses usually try to make money. Unless they are able to make enough money to cover their costs, they don't survive for very long. When they're deciding which choices to make it's usually the "profit objective" they have in mind. Each business is constantly racing choices. The business manager must constantly be trying to use all the buildings, machines, equipment, raw materials, management and workers' skills and everything else in the best possible ways. The best ways are the ways that help most to achieve the objectives of the business.

2. The "choice decisions" of businesses centre around such questions as: Which product(s) should we produce? How much of it (of each) should we produce? Which kinds of inputs (labour, resources, machinery, etc.) should we use? How much of each kind? When should we add more inputs? Or cut back some? Should we build a larger factory? Maybe initiate an employee training program?

Most of these choices (and many more) are facing most businesses all the time. How do businesses decide about these things? How do they choose? It is assumed that all firms are following rational decision-making, and will make all the moves which they think will be profitable. They will reject all the others.

3. "Choice-decisions" and human societies. How does the society decide what to do and what to make? and what to use up and what to save? and who get to have how much of what? Seeing how the society solves its economic problem is not obvious. Not unless you understand economics.

The society might aim for any number of objectives defined mostly by the people who have the power to influence the economic choices. Each society has some kind of economic system. It's through the "economic system" that the economic choices are made by "the people in charge" and carried out by the working people. So, it's important who gets to influence the есonomic choices made by the society, wouldn't you say? (It sure is!) In some societies, control over the economic resources – that is, the power to decide what to dl with what, and who will get how much of what- is diffused among many people. In other societies this control is concentrated in the hands of one, or a few.

4. Run, business, run! Price is the sum of all "elements of cost", plus "profit" by the producing company or corporation, increased by the "profit" amount added by the "supplier" or "distributor", plus inflation, plus all the taxes imposed by Federal State and Local Governments. Beginning in the early sixties, the U.S. "producer" started to feel, and couldn't stand, the pressure of all these costs and regulations being imposed on him; so he began leaving the country to produce his product where it was cheaper to build his product, and less costly and less cumbersome to do business. How simple the problem and how simple the solution!

5. The opportunity cost of going to college is the money you would have earned if you worked instead. On the one hand, you lose four years of salary while getting your degree; on the other hand, you hope to earn more during your career, thanks to your education, to offset the lost wages.

Here's another example: if a gardener decides to grow carrots, his or her opportunity cost is the alternative crop that might have been grown instead (potatoes, tomatoes, pumpkins).

In both cases, a choice between two options must be made. It would be an easy decision if you knew the end outcome; however, the risk that you could achieve greater "benefits" (be they monetary or otherwise) with another option is the opportunity cost.

6. Scarcity means we all have to make choices and all choices involve "costs" Not only do you have to make a choice every minute of the day, because of scarcity, but also when making a choice, you have to give up something of value. The cost is called opportunity cost. Opportunity cost is defined as the value of the next best thing you would have chosen. It is not the value of all things you could have chosen. Choice gives us "benefits" and choice gives us "costs". A goal in life for each of us is to look at our wants determine our opportunities and try and try to make the best choices by weighing the benefits and costs.

7. Specialize where opportunity costs are lowest. People typically have skills or talents in only one or few areas, and because they lack time or skill to pursue every activity they choose where to focus their energy. Firms and nations too have limited amounts of resources and must choose where to use their resources. The problems faced by individuals, by firms, and by whole nations, and the solutions found by each, are fundamentally the same. In making your choice, it is in your best interest to specialize in the activity that produces the lowest opportunity cost, or, in other words, where your opportunity costs are lowest. The choice of which area to specialize in is made on the basis of relative opportunity costs or, otherwise, comparative advantage, which is the ability to produce a good or a service at a lower opportunity cost than someone else.

8. Costs. The firm incurs a variety of costs when it produces, and economists split these in various ways. One way is to split them into fixed costs and variable costs. Fixed costs are costs that do not vary as the level of production varies. These include such things as rent, business rates and security costs. Variable costs are costs that do vary as output varies and so will include things like raw materials, labour costs, energy costs and so on.

Another very similar way to split costs is into direct costs and indirect costs. Direct costs are similar to variable costs, and are costs that can be directly attributed to the production of each unit of the good. This will therefore be things like the cost of the raw materials, the packaging, the labour time that went into the production and so on. Indirect costs are more commonly known in practice as overheads, and are general costs that are not specifically related to the product. They may be things like marketing and distribution costs, the cost of secretarial staff, and general bills like phone bills. (2708 п. зн.)

Дата добавления: 2015-11-05