scarcity a limit in the amount of goods and services

causes us to make choices because of restricted options

opportunity cost sacrificing some goods or services in favor of another

getting something at the cost or expense of another thing (the actual good)

usually the best option

utility benefits of consuming a good or service, usually after making a purposeful, rational decision

marginal extra, additional, or a “change in”

trade-off exchanging one good or service for another

making a choice!

Opportunity Cost Graph linear graph

linear = constant

attainable inside of linear graph

NO OPPORTUNITY COST AVAILABLE

unattainable outside of linear graph

OPPORTUNITY COST AVAILABLE

4 Resources Land

Labor

Capital

Entrepreneurial Ability

PPC Production Possibilities Curve

Why does the PPC graph have a “bowed” shape? the Production Possibilities Curve shows a “bowed” shape to it due to it representing INCREASING OPP. cost

efficiency ON PPC curve

inefficiency (“inside”) inside PPC curve

Unemployment Rate 4-5%: acceptable rate of unemployment; still on curve

7%: unacceptable rate of unemployment

Growth represented on PPC outward shift on PPC

Ways to create an outward shift (showing growth) on PPC: produce more goods & services

increase either the quantity OR quality of the factors of production

savings don’t consume all of your resources

investment firms purchase capital equipment to expand production of goods & services

ex: govt. spending on INFASTRUCTURE

What may cause Economic Growth? a higher-educated workforce

increased imports from foreign countries

increased exports to foreign countries (to facilitate modern trade)

increased production of goods and services

keeping unemployment rate at the correct level

supporting new businesses and startups