1. Economics Ch. 1 Section 1 Notes

2. Thinking in terms of COSTS and BENEFITS
There are costs and benefits to almost everything we do
“cost” does not only include money $
Opportunity cost- the alternative given up when a choice is made: the value of the next best alternative

3. Examples of Opportunity Cost
1. You chose to come to school today. What is your opportunity cost?
2. You spent $50.00 on a new video game. What is your opportunity cost?

4. Economics teaches you to look at the “big picture”
Thinking in terms of a global economy
Global Economy- an economy in which economic actions taken anywhere in the world may affect your standard of living.
What happens to gas prices when there is conflict in the middle east?
When other countries are suffering from a “sick” economy, the U.S. also suffers because those countries are not able to buy as many products from us.

5. Thinking in terms of the Small & Big
Microeconomics- studies the behavior & choices of small units such as individual firms or single markets
Examples: unemployment in the car industry, individuals buying personal computers, what the market is like for foreign cars in the U.S.
-Macroeconomics-studies the behavior & choices as they relate to an entire country
Examples: the national average for unemployment, are citizens buying/producing more from one year to the next year

6. The fundamental problem of economics is SCARCITY.
there are not enough resources to meet everybody’s needs
you can’t have everything you want & therefore must make choices
when you make a choice to do/have something, you give up something else