Meaning, scope and objectives of the firm

Business economics applies economic theory to business problems: what to produce, how much, at what price, and with what resources. Its core problem is choice under scarcity — wants are unlimited, resources are limited. Worked example: a firm with one idle machine must choose between two products; the right question is not which product earns more revenue, but which earns more after giving up the other — the opportunity cost of the choice.