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Word Count: 615
Economics is less about money then it is about resource management That is how to satisfy unlimited wants with scant resources The question of how to satisfy unlimited wants with limited resources is one that effects a multitude of people including individuals firms and governments A very important concept that needs to be understood in order to effectively answer this question is that of opportunity cost Opportunity cost is often referred to as the real cost of things That is the cost of investing energy or resources into something is the cost of not being able to spend those resources on something else For instance the individual may choose to spend his money on a new car or has the option of taking an overseas holiday The real cost of spending his money on the holiday is not being able to spend his money on a new car which will have implications on his lifestyle However the issue of opportunity cost affects the firm in a slightly different manner The firm must decide whether or not to invest its resources in stepping up production of an existing product or producing a completely new product This means that the real cost of choosing to step up production of a certain product was not being able to produce an additional product which may give the company an advantage in the marketplace Finally the government is affected by the issue of opportunity cost and the manner with which the government deals with this problem has by far the broadest implications on the largest number of people The government must try to balance satisfying community wants with spending resources for the good of the country They must also deal the with the fact that for every dollar they spend on what part of the country is a dollar they must take away from another department Having understood this concept one can now start
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