Chapter 1: What is economics about? Economics is concerned with addressing the economic problem of satisfying unlimited wants with our scarce resources. Each economy must answer the following four basic questions: What to produce? How much to produce? How to produce? How to distribute production? Whenever we choose to produce or consume one product, we miss out on the alternative products that could have been produced using those resources. This is known as the opportunity cost. …showed first 75 words of 1602 total…

…showed last 75 words of 1602 total…increasing output levels begin to raise average production costs. Internal economies and diseconomies of scale result from changes in production levels for the individual firm, whereas external economies and diseconomies of scale result from changes in production levels or size of an entire industry. Investment and technological change can affect the costs and competitiveness of firms by improving production methods, lowering prices, reducing staffing requirements, increasing output, raising profits, expanding product variety and fostering globalization.