1. The term scarcity refers to limitations. We have unlimited wants, but limited resources to satisfy them. We are forced to make choices and satisfy just some of our wants, or satisfy them partially.
2. We have unlimited wants which can be satisfied by goods or services. But because of our limited resources (scarcity) only some of our wants can be fulfilled. We have to choose which of our needs will be satisfied. Rational choice is made when benefits and cost for each alternative is compared and the alternative with the biggest benefit over cost is chosen. This is a personal choice because each individual will assign different benefit and cost to each alternative based on personal preferences. Goods and services are produced with factors of
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Economics is the social science that studies the choices that individuals, businesses, governments, and societies make as they cope with scarcity and the incentives that influence and reconcile those choice. There are two branches of economic:
a. Macroeconomics
b. Microeconomic
4. Macroeconomics is the study of the performance of the national economy and the global economy. It study topics like inflation, unemployment, and economic growth. Microeconomics study the choice that individuals and businesses make, the way these choices interact in markets, and the influence of governments.
5. Entrepreneurship is the human resource that organizes labor, land, and capital. Entrepreneur will develop new ideas, products, and improve existing products. They are the driving force in economy.
6. Tradeoff is when we give up one thing to get something else. Tradeoff is when I read a book instead of watching TV.
7. Opportunity cost of something is the highest-valued alternative that must be given up to get it.
a. Opportunity cost for attending college are the wages I lost by reducing my work hours, the value of the time I could spent with my children instead of studying. Opportunity cost are all the things I could have if I choose not to go to