UNIT 1 ECONOMICS FUNDAMENTALS
economics
1. the study of how individuals and nations make choices about ways to use scarce
resources to fulfill their needs and wants
2. Social science that deals with the study of the production, consumption,
distribution of goods and services and the transfer of wealth to obtain those
goods and services.
scarcity
a situation in which unlimited wants exceed the limited resources available to fulfill those
wants
trade-offs
giving up one thing in favor of another
opportunity costs
the highest-valued alternative that must be forgone when a choice is made
rational decisions
choice in which you weigh the costs and benefits of each option
marginal benefit
the additional satisfaction or benefit received when one more unit is produced
marginal cost
the cost of producing one more unit of a good.
marginal benefit-marginal cost analysis
Rational decision making involves marginal benefits that equal or exceed the marginal
costs
resources
anything that is used to produce goods or services
allocation of resources
decision on how to divide scarce resources among different uses
goods
tangible products that we use to satisfy our wants and needs
services
actions or activities that one person performs for another
economics
1. the study of how individuals and nations make choices about ways to use scarce
resources to fulfill their needs and wants
2. Social science that deals with the study of the production, consumption,
distribution of goods and services and the transfer of wealth to obtain those
goods and services.
scarcity
a situation in which unlimited wants exceed the limited resources available to fulfill those
wants
trade-offs
giving up one thing in favor of another
opportunity costs
the highest-valued alternative that must be forgone when a choice is made
rational decisions
choice in which you weigh the costs and benefits of each option
marginal benefit
the additional satisfaction or benefit received when one more unit is produced
marginal cost
the cost of producing one more unit of a good.
marginal benefit-marginal cost analysis
Rational decision making involves marginal benefits that equal or exceed the marginal
costs
resources
anything that is used to produce goods or services
allocation of resources
decision on how to divide scarce resources among different uses
goods
tangible products that we use to satisfy our wants and needs
services
actions or activities that one person performs for another
