Unit 1 Summary on Scarcity, Choice, and Opportunity Costs

Flashcards based on key concepts from Unit 1 Summary on Scarcity, Choice, and Opportunity Costs in economics.

What is economics fundamentally concerned with?

The study of the allocation of resources due to scarcity.

What causes scarcity in economics?

Limited resources and unlimited wants and needs of people.

What are the three basic economic questions?

1. What to produce? 2. How to produce? 3. For whom to produce?

What are the Factors of Production (FOPs)?

1. Land (natural resources) 2. Labor (workers) 3. Capital (machinery, tools, etc.) 4. Entrepreneurship.

What is opportunity cost?

The next best alternative foregone when a choice is made.

In the context of decision making, what is meant by marginal cost?

The additional cost incurred from consuming one more unit of a good or service.

How does one determine the benefit of an opportunity cost?

By comparing the benefit derived from the chosen option versus the value of the next best alternative.

What is a consequence of scarcity that affects individuals and societies?

The necessity to make choices regarding resource allocation.