Our concept of what a business is involves the important use of economic calculation in the decision-making process by an entrepreneur whether or not to form a business unit, or if expansion of an existing business unit is contemplated, whether or not to proceed with the expansion. The entrepreneur attempts to construct a persuasive story, or case, persuading him- or herself to undertake or not to undertake the formation of a new business (or expansion of an existing one) by utilizing eight (8) key accounting concepts (or categories). The eight key accounting concepts utilized in economic calculation are found immediately below. Which pair of concepts is not included in the list of concepts utilized in economic calculation?

a. capital and income
b. revenue changes and rates of taxation
c. expenditures and savings
d. costs and yield

When you are carrying out economic calculations, you are trying to determine how to allocate resources more effectively. You will need to analyze different economic factors like income, capital, tax rates, expenditures, savings, changes in income levels, but you will not use costs and yields. Cost and yields are used to determine how profitable an individual project or investment is, but it is not used in the macro level (the big picture).