Scarcity and Choice / Opportunity Cost

Scarcity – Combination of limited economic resources and unlimited wants Allocate – To distribute scarce resources in order to satisfy the greatest number of wants and needs

The 3 basic questions of economics: 1.WHAT to produce? 2.HOW to produce it? 3.FOR WHOM to produce it? Productivity – The level of output that results from a given level of input (used to determine whether resources are being used wisely) Efficiency – The use of the smallest amount of resource to produce the greatest amount of output. Division of labor – Assigning a small number of tasks to each worker 1.WHAT to produce? 2.HOW to produce it? 3.FOR WHOM to produce it? Productivity – The level of output that results from a given level of input (used to determine whether resources are being used wisely) Efficiency – The use of the smallest amount of resource to produce the greatest amount of output. Division of labor – Assigning a small number of tasks to each worker 1.WHAT to produce? 2.HOW to produce it? 3.FOR WHOM to produce it? Productivity – The level of output that results from a given level of input (used to determine whether resources are being used wisely) Efficiency – The use of the smallest amount of resource to produce the greatest amount of output. Division of labor – Assigning a small number of tasks to each worker

Trade-off – Sacrificing one thing for another Opportunity Cost – The value of what was given up in a trade-off

Production Possibilities Curve – Shows all possible combinations of 2 goods or services that can be produced in a certain time period 2 assumptions: 1.Available resources and technology will not change 2.All factors of production are being used as efficiently as possible

Inefficiency Economic Growth

EXCHANGE

Exchange Producers and consumers agree to provide one type of item in return for another TYPES OF EXCHANGE Barter Exchanging one set of goods for another Money Any item that is readily accepted by people in return for goods and services Credit Allows consumers to use items before completing payment for the merchandise

Value The amount of money or price something is worth Utility The usefulness to a person or consumer satisfaction Self-sufficiency When people can fulfill all their needs without outside assistance Interdependence Events or developments in one region of the world or sector of the economy influence events or developments in other regions or sectors.