Unit One - Basic Economics Concept {1/17/18}

Vocabulary:

• Scarcity- The fundamental economic problem that all societies faces. Refers to the limited amount of resources available. 
• Economics- is the study of how society's manages its scare resource. 
• 1st Pillar of Economics- "Nothing in our material world can come from no where or go no where, nor can't be free. Everything in our economic lives has a source, destination, and cost must be paid. 
• Five Key Economic Assumptions-   
• A societies wants are unlimited but ALL resources are limited- scarcity. 
•  Due to scarcity, choices must be made. Every choice has a cost. - Trade off
•  Everyone's goal is to make choices that maximize there satisfaction. Everyone acts in there own "self-interest". 
• Everyone makes decisions by comparing the marginal costs and marginal benefits of every choice.
•  Real life situations can be explained and analyzed through simplified models and graphs.

• Marginal cost- the cost of a one unit increase in an activity. 
• Marginal benefit- what you gain when you get one more unit of something.
• Ceteris Paribs- "other things being equal " or cause and effect. 
• Opportunity cost- the next best thing that you must give up to get something of higher value. Alternative is forgone. 
• Macroeconomics- the study of economy.
•  examples include: national output, overall price level, unemployment.
• Microeconomics- examines the small economic units, the components of the economy. 
• examples include: individuals, households, firms, industries. 
• Utility- Ability or capacity of a good or service to be useful and give satisfaction to someone
• Allocate- to distribute
• Price- the amount of money a consumer pays
• Cost- the amount a prooducer pays
• Investment- money spent by businesses to improve there production
• Consumer Goods- created for direction consumption. 
• examples include: Burger King story or its the finished product.
• Capital Goods- created for indirect consumption.
• examples include: items used to create a finished product or making a sandwich story.
• Services- actions that a person preforms for another. 
• Explicit costs- traditional out of pocket costs.
• Implicit costs- the opportunity costs such as a forgone time or income.