Principle 1 and 2 Flashcards
Scarcity
the limited nature of society’s resources
Economics
the study of how society manages its scarce resources
Resource
any finite source of use in an economy… every good and service!
Natural resources
any finite material of use that comes from the earth
Human resources
humans who make goods and provide services that others use
Capital resources
the machines, tools, and buildings used for the production of goods & services
Opportunity cost
whatever must be given up to obtain some item
Macroeconomics
the behavior, performance, and impact on changes of an economy as a whole (government policy)
Cost-benefit analysis
way to compare the costs and benefits of an intervention, where both are expressed in monetary units
Sunk cost
the behavior and performance of an economy as a whole
Rational People
people who systematically and purposefully do the best they can achieve their objectives
Marginal Change
A small incremental adjustment to a plan of action
Principle 1
People face tradeoffs
Principle 2
The cost of something is what you give up to get it.
Microeconomics
the study of the economy and its effect on individuals (business and individual decisions)
