In business it is essential that owners consider important factors when outlining their business goals. Economics used as a tool to solve coordination problems. They include what and how much product to produce, how to produce their product, and who they are producing it for. To effectively answer these questions we turn to economics. Colander (2006) describes economics as “the study of how human beings coordinate their needs and desires, given the decision-making mechanisms, social mores, and political realities of society” (p. 4). The foundation of economics is based on several factors that help understand an economy. These factors include economic reasoning, economic intuitions, economic institutions, and economic policy options. Economic reasoning is a way of thinking that evaluates an option based on costs and benefits. Terms such as marginal costs, marginal benefits, and opportunity cost explain economic reasoning in more detail. Marginal costs and benefits are respectively the additional costs and benefits to you on top of those you have already achieved. Opportunity cost is the cost lost by not selecting one option in favor of another. Insights in economics are theories discovered by economists that are useful for understanding trends. One of the best known is the invisible hand theory. Economic institutions include, but are not limited to, laws, common practices, and organizations in a society, and form the basis for understanding whether economic theory can be applied to reality (Colander, 2006, p. 14). It is very common for economic institutions to vary from country to country. Finally, the action or inaction taken by government to influence economic actions is called economic pol…… half of paper……w individuals demand products and goods offered versus how businesses provide those goods and services . Economics is based on several factors such as economic reasoning, intuitions, terminology, institutions and policy options that help develop the economy as a whole. The laws of supply and demand illustrate the relationship between producer and consumer based on price and quantity supplied and demanded. The inverse relationship between the law of demand and the direct relationship between the law of supply and price and quantity allow economists to measure certain factors such as market equilibrium. These factors can change with movements and shifts along the supply and demand curves. To fully understand these movements and precisely quantify their effects, the elasticity of supply and demand is calculated to better illustrate how businesses and individuals will react to price changes..