basic economic concepts notes

Basic Economic Concepts (Full English Version)


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: