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scarcity
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unlimited wants, but limited resources
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economics
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the study of scarcity and choices
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opportunity cost
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something that you give up for the benefit of something else
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trade-off
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material goods (ex: getting jeans vs. shoes)
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marginal
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additional
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utility
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satisfaction
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allocate
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distribute
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positive statements
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based on facts and avoid value judgements; what is
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normative statements
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includes value judgements; what ought to be
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shortages
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occur when producers won't/can't offer goods or services at current prices; temporary
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price
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amount the buyer/consumer pays
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cost
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amount the seller pays to produce a good
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investment
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the money spent by businesses to improve their production
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goods
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physical objects that satisfy need and wants
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consumer goods
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created for direct consumption (ex: pizza)
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capital goods
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created for indirect consumption; used to make consumer goods (ex: oven, knives, blender)
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services
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actions/activities that one person performs for another (trading, cooking, cleaning, etc.)
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explicit costs
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the traditional out-of-pocket costs of decision making
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implicit costs
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opportunity costs such as forgone time and forgone income
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how to find profit
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revenue - costs
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law of increasing opportunity cost
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as you produce more of any good, opportunity cost will increase
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how to find per unit opportunity cost
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opportunity cost ÷ units gained
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productive efficiency
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the least costly way
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allocative efficiency
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products produced are the ones most desired by society
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demand curve
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graph of a demand schedule; downward slope, shows inverse relationship between price (y) and quantity demanded (x)
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