{"id":1001,"date":"2015-05-09T20:09:20","date_gmt":"2015-05-09T20:09:20","guid":{"rendered":"https:\/\/courses.candelalearning.com\/masterybusiness1xngcxmaster\/?post_type=chapter&p=1001"},"modified":"2015-07-11T02:10:18","modified_gmt":"2015-07-11T02:10:18","slug":"why-it-matters-2","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wmintrobusinessx51xmaster\/chapter\/why-it-matters-2\/","title":{"raw":"Why It Matters: Economic Environment","rendered":"Why It Matters: Economic Environment"},"content":{"raw":"

Why explain fundamental economic principles and describe how they shape the business environment?<\/h2>\r\n\"Photo<\/a>\r\n\r\nEconomics is about choices: <\/em>namely,\u00a0<\/em>how we choose to allocate scarce resources and how our choices impact others. Beyond that, it's about the choices made by\u00a0businesses, government, and other countries. Let's begin with ice cream\u2014something familiar and tasty to most people\u2014and use it as a\u00a0framework for thinking about\u00a0economics.\r\n\r\nLet's say you live in Boise, Idaho, and decide to go out for ice cream with your friend Charlie,\u00a0who has been reading about ice cream flavored with Persian saffron. That's the kind he wants, but none of the five ice-cream shops you visit has it. Why not? Why can't they meet his demand?\u00a0Because Charlie\u00a0is the only person in Boise who has ever asked for it, and none of the shops has\u00a0decided to carry something so\u00a0expensive (the saffron costs nearly $1,000 per ounce) and, frankly, strange. They have chosen to offer\u00a0ice cream\u00a0that is\u00a0low-cost, high-demand, and easy to manufacture.\r\n\r\nThe next day, Charlie\u00a0is still obsessed with saffron\u00a0ice cream, and\u00a0he's discovered a shop in Dubai, where, for the mere price of $816 (per scoop, fancy toppings included), one can try this exotic treat. Now Charlie has some economic choices to make. Including the $1,800 airfare, plus the other travel expenses (hotel, cabs, etc.), the trip to Dubai will\u00a0cost\u00a0$2,600\u2014at least. It will also cost Charlie\u00a0time: the time it takes to plan the trip, the\u00a0days off work, and travel time. Then, there's the opportunity cost. While he is planning, traveling, and eating his ice cream, Charlie's\u00a0giving up the opportunity to do other things with his time and money. And there are unforeseen choices and expenses: What if he gets to Dubai and they've run out of saffron ice cream? Does he hang around in Dubai, investing more resources and waiting for them to restock? What if he tries Persian saffron\u00a0ice cream and says, \"Yuck!\"\u2014and wishes he'd bought banana ice cream back in Boise?\r\n\r\nThis is an extreme, unlikely situation, of course. However, the choices that ice-cream manufacturers, ice-cream shops, and people like Charlie make every day are all examples of economic decisions: at every turn, a choice has to be made about the allocation of limited resources. What economic decisions do you make in your life?\r\n\r\nThe purpose of this module is to give you an understanding of the fundamental principles of\u00a0economics, some of the factors that drive economies, and how economics shapes the business environment. You will likely learn more about economics as you continue your education, but this section should serve as an excellent introduction and give you some tools to think about the impact of economics on your daily life.\r\n

Learning Outcomes<\/h3>\r\n