Case-1 Thinking like an economist: The basic vocabulary of the field - Essay Example

Case Thinking like an economist: The basic vocabulary of the field The chosen firm and the underlying interest The company selected for the projectis subway. The company is ranked second on the Top 10 list of franchises for 2012. It is a restaurant franchise of America. The organization primarily sells submarine sandwiches and salads. Doctor Associates owns and operates the company. The company is second largest operator of restaurant globally (Subway, 2012). The company is the largest single brand restaurant.

The interest underlying selection of the company is in spite of being a single brand restaurant chain; the company has succeeded to expand globally. Three fundamental questions in economicsThe fundamental questions in economics applied to firm are as follows:What to produce? How to produce?Who uses it?To address the first question one can take into account three categories namely Basic Needs, Wants and Services. Food, Clothing and shelter constitute the basic needs while luxury items constitute the Wants.

Education, Health Care, Defense constitute the third that is services category. The chosen company operates in the basic needs category. It has many restaurants globally. The topics which should come under the second question are size as well as the organization of facilities, the resources that is required by the company and the amount of time and effort required. In course of time, Subway has emerged as one of the leading restaurant brand worldwide. As subway operates in basic needs category it must have studied the market carefully before launching the brand.

It should have drawn the action plan first and the future prospects of the brand if it can operate at potential level. The resources required are obviously the license from the country where it is willing to operate, how to finance the expansion plan and efficient employees to keep the company on the right track. Costs associatedThe costs associated with starting a restaurant business are rent or operating costs, location improvement costs, expenses for miscellaneous expenses and costs for advertising and marketing.

The costs under operating costs include security deposit, rent for the first month and costs for internet and phone services. The costs associated with building up furniture and other utensils as well as costs associated with initial supply of food and beverages constitute the second type of cost. Insurance, costs relating to permits and licenses, variable accounting costs and ordering and payment technology costs constitutes the second type of costs. He costs associated with public relations services and costs on business cards, fliers and coupons as well as menus constitute the third type of costs.

Opportunity cost of the chosen firmIn order to pursue an action, the cost of the available alternative that was not taken into account is called opportunity cost (Mankiw, 2009). The owner of the franchise could have opted to keep the fund in banks. In that case the owner would have earned interests on savings. The owner could also have invested the fund in shares. The other available opportunity costs include the owner could have start his own business with new brand name. ReferencesSubway. (2012).

Why Choose SUBWAY®?. Mankiw, G. (2009). Principles of Microeconomics. 3.