Chapter 1 introduces key economic terms and concepts, emphasizing how society manages scarce resources and makes decisions to maximize benefits. Economics is defined as the study of resource management under scarcity, where rational behavior leads individuals to make choices optimizing their utilit...
● Economics:
○ The study of how society manages scarce resources.
● Scarcity:
○ Society has limited resources and cannot produce all the goods and
services people want.
● Rational Behavior:
○ When individuals make the choices that provide them with the best
benefit or utility for themselves.
COSTS
● Implicit Cost:
○ These costs do not involve the direct payment of money.
○ e.g. opportunity cost, time costs
● Explicit Cost:
○ These are costs that require the explicit spending of money
○ e.g. wages, rent
● Opportunity Cost:
○ The cost/benefit that could have been gained from an alternate decision
in a trade-off.
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