The Business World Is Built Around Economics

2407 Words Dec 4th, 2014 10 Pages
the business world is built around economics. In the book, Naked Economics, Charles Wheelan attempts to apply broad economic concepts to everyday life using examples and anecdote. Topics such as the different types of economies, globalization, incentives, and government regulations are discussed. Economics can be defined as the study of how and why people spend money (6). In attempting to understand economics the understanding and discussion of major concepts of economics is key.
The market economy is an economic system where the market is decided by the law of supply and demand. The prices of goods are determined by who is willing to pay the most for a particular product. Since a market economic is not controlled by the government, companies are in competition to draw customers. A market economy is the cause of innovation and competition.
The market economic system is the ultimate self-functioning machine. In this particular economic system markets are interdependent. For example when gas prices soar to record highs consumers switch to motorcycles to replace cars. “According to the American Journal of Public Health, an increase of $1 in gas prices cause 1,500 more motorcycle accidents.” One market can have an effect on another market and both may or may not benefit.
Opportunity cost, according to Merriam Webster is defined as, “the opportunities forgone in the choice of one expenditure over others.” Opportunity cost occurs on a daily basis. Take choosing to buy a candy…
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