1️⃣ Scarcity
Scarcity means that resources are limited, but human wants are unlimited.
Because of scarcity, every economy must make choices about how resources should be
used.
2️⃣ Choice
Choice refers to selecting one option and sacrificing another because resources cannot
satisfy every want.
3️⃣ Opportunity Cost
Opportunity cost is the value of the next best alternative that is forgone when a decision is
made.
Example: If you spend money buying a movie ticket, the opportunity cost may be a meal or
book you could have purchased instead.
4️⃣ Production Possibility Curve (PPC)
● The PPC is a graph that shows the maximum possible combinations of two
goods or services an economy can produce with available resources and
technology.
Points on PPC represent:
● On the curve: Efficient use of resources
● Inside the curve: Inefficient use
● Outside the curve: Not possible with current resources
5️⃣ Central Economic Problems
Due to limited resources, every economy must answer three basic questions: