The study of how to allocate scarce resources among competing ends.
This occurs because our unlimited desire for goods and services exceeds our limited ability to produce them due to constraints on time and resources.
This type of economics describes the way things are.
This type of economics addresses the way things should be.
Factors of Production/Inputs
- The resources used in the production process, including:
- Human Capital
- Natural Resources/Land
The physical and mental effort of people.
Knowledge and skills acquired through training and experience.
Manufactured goods that can be used in the production process, including tools, equipment, buildings, and machinery.
The ability to identify opportunities and organize production, and the willingness to accept risk in the pursuit of rewards.
Any productive resource existing in nature, including wild plants, mineral deposits, wind, and water.
The value of the best alternative sacraficed as compared to what actually takes place.
The cost of making one product (chair) over another (birdcage).
Production Possibilities Frontier
An illustration showing the choices an economy faces and the opportunity cost of making one good rather than another.
This occurs when an economy is using all of its resources productively.
The "rise over run" of a line.
The value after removing the negative sign.