Economics Unit 1

Goal

something you aim for that takes planning and work

Economics

The study of how people seek to satisfy their needs and wants by making choices

Short-term goal

can be accomplished within 3 months

Long-term goal

can be accomplished in 1-10 years

Medium term goal

can be accomplished in 3 months to a year

Value of setting goals

allows you to:
define what you want to accomplish
pushes you
challenges you to rise to a new level
measures your progress
celebrate your successes
realize when you have strayed off the path
know when you've arrived

SMART goals

Specific, Measurable, Attainable, Realistic, Timely

Needs

things that are required in order to live

Wants

things that add comfort and pleasure to your life

Scarcity

Limited quantities of resources to meet unlimited wants

Trade-off

all the options given up when a decision is made (several of these)
Ex. Buy one brand of cereal means you don't get the the other brand, or another kind of breakfast food

opportunity cost

the value of the next best option sacrificed for a chosen decision; the cost of not choosing the "best" alternative(only 1)

if you buy a brand of cereal the opportunity cost is not getting something else with that money

unintended consequences

the unexpected and unplanned results of a decision or action

Externalities

the cost or benefit of an action that affects a third party other than the buyer or seller.

positive externality

beneficial side effect that affects an uninvolved third party

negative externality

the harm, cost, or inconvenience suffered by a third party because of actions by others

Choice

deciding how best to use limited resources

Marginal Benefit (MB)

the additional benefit incurred by producing one more unit

Marginal Cost (MC)

the extra cost incurred by producing one more unit of a product

absolute advantage

when someone/someplace is better at producing something than everyone else

comparative advantage

when someone/someplace has a lower opportunity cost for producing something than their trade partner