Economics: Unit 1 Economic Thinking

needs

something necessary for survival

want

an item that one desires, but is not essential for survival

resources

materials, time, money and people used to make/buy goods and services

goods

physical objects

services

action/activity performed by a person for another person

scarcity

limited quantities of resources, goods, and services to meet unlimited needs and wants

economics

the study of how people seek to satisfy their needs and wants by making choices (study of scarcity)

alternatives

all possible choices or courses of action

trade-offs

alternatives that are given up when we make a choice (instead of…, but…, or…)

costs

negatives/disadvantages/cons

benefits

positives/advantages/pros

incentives

the hope of reward or fear if punishment that encourages a person to behave a certain way

opportunity cost

the value of the next best alternative/trade-off- ‘opportunity lost’- your second choice

external costs and benefits

unintended consequences, usually creating a new situation or affecting others that were not part of the original decision; decision maker is often unaware or didn’t think of this before making their decision

marginal

additional