Resource: Anything used to produce a good or service.

Resources are always limited or scarce.

Economics - The study of how people choose to use scarce resources to satisfy their unlimited wants.

Scarcity: Our wants are greater than the resources available to satisfy them.

Scarcity forces you to choose. These choices are called tradeoffs.

Trade off: Whenever you choose one thing over another you have made a tradeoff.
Opportunity Costs: The value of the next best alternative that is given up.

Marginal Cost -. What you have to give up to gain one more unit of an activity or something.

Marginal Benefit -what you gain by adding one more unit of an activity or something.

Includes: Money, time, entertainment, experience, fun, etc…

Marginal Analysis - Tool used to compare the weight of marginal costs and marginal benefits.

Incentive: Something that motivates a person to make a decision.

Positive Incentives: Good grades, awards, money, social standing/friendship, food, dating, etc.
Negative Incentives: Failing grades, fines, jail time, punishment, embarrassment, social consequences.

Rational Decision Making: A decision made after weighing both the costs and benefits.

Utility - Usefulness, satisfaction, or enjoyment gained from a good or service.

We can measure utility using an economic term: utils.

Marginal Cost - what you have to give up to gain one or more unit of an activity or something.

Marginal Benefit -what you gain by adding one more unit of an activity or something.

Can be measured in utils.

Law of Diminishing Marginal Utility: After adding one more unit of something, the marginal benefit (pleasure) of adding another will always be less than the first.

• Factors of Production: the resources or inputs used to produce goods and services.

Land, entrepreneurship, labor, and capital.

Outputs: The goods and services produced by the resources.

• Perpetual Resources: Solar and wind energy.

• Renewable Resources: Forests, fish, and animals.

Nonrenewable Resources: Fossil fuels: oil, coal, natural gas.

• Human Capital: The knowledge and skills people possess from education, on the job training (OJT), and other experiences.

• Degrees, certificates, work experience, problem solving skills, physical abilities, tech skills, creativity, reading level, language skills, relationships, teamwork etc...

• Physical Capital: Human made tools, machines, equipment, and buildings a business needs to be productive.

• Raw materials, tools, vehicles, technology, software, etc..

• Labor: The time and mental & physical effort that people devote to producing goods and services in exchange for being paid.

Specialization: The development of skills or knowledge in one part of a job or a field of interest.