ECONOMICS: THE FOUNDATION OF BUSINESS Understanding economics is essential to understanding business.7 No single definition of economics satisfies everyone, but let's look at one concise description: Economics is the study of how a society (people) chooses to use scarce resources to produce goods and services and to distribute them to people for consumption. This definition raises certain issues that are key to understanding economics: (1) resources, (2) goods and services, and (3) allocation of both resources and products. Let's discuss each of them. Resources A nation's resources consist of three broad areas: natural, capital, and labor. Natural resources are provided by nature in limited amounts; they include crude oil, natural gas, minerals, timber, and water. Natural resources must be processed to become a product or to be used to produce other goods or services. Part One The Business Enterprise For example, trees must be processed into lumber before they can be used to build homes, shopping malls, and schools, Capital resources are goods produced for the purpose of making other types of goods and services. Some capital resources, called current assets, have a short life and are used up in the production process. These resources include fuel, raw materials, paper, and money. Long-lived capital resources, which can be used repeatedly in the production process, are called fixed capital. Examples include factory buildings, compact-disk machines, personal computers, and railroad cars. Labor resources represent the human talent of a nation. To have value in the labor force, individuals must be trained to perform either skilled or semiskilled work. For example, the job of physicist requires extensive training, whereas only minimal training is needed to operate a service station's gas pumps. This collection of human talent is the most valuable national resource. Without human resources, no productive use of either natural or capital resources is possible. (未完待续)