Economics focuses on the study of scarcity . We cannot have everything we want. No matter what we have, we can always think of something else we would like, and unfortunately, every item we desire is created from resources which are fixed in amount. Economics is the study of people trying to get the things they want. Choices Because we can't have everything we want we must make choices.
Opportunity cost is the loss of our next best alternative when a choice is made.
The resources used to make our desired goods and services are classified into four general categories, or factors of production. Land , refers to all the raw materials, gifts of nature or natural resources used in production. Labor , refers to all the productive skills and energies of human resources. All the processed materials, tools and equipment are referred to as capital resources. Each of these resources is limited in the amount which is available for production.