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Econ Key terms.docx

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Hannah Holmes

Chapter 1: Key Terms  Scarcity means there is a limited amount of resources in society o Ex. Oil, it will eventually run out.  Economics is study how to manage the way we handle the amount of limited resources. o Ex. Firms (business). My dad’s restaurant. We decide how much product we will buy such as chicken beef and pork and how much products we use to produce food for the customers. Since chicken is not an unlimited supply, and chicken is more popular than beef then we have to be smart where to use the chicken and how much chicken to buy. In other words we take a certain amount of chicken for cooking orders, for chicken balls, general chicken etc. to satisfy each of the demand. o Ex 2. You having $200 for a week for food. You can either spend it on food for a full week or spend it on food on one night at a restaurant. Since that $200 is scarce it is wiser to spend it at a super market for food for the whole week.  Opportunity Cost something you give up to OBTAIN something else. o Ex. buying an iPhone that you need or wait 2 weeks for the iPhone 5.  Tradeoff giving up something you like to BENEFIT something else you like. o Ex. Not going to the party which you want and spending more time on studying which is crucial for a good passing grade. The tradeoff in this situation is your not having fun and your devoting your time towards preparing for your upcoming test. o Ex. Buying a car. You choose two cars you like but you can only buy one. The BMW consumes m
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