Fundamental Economic Concepts Review.doc - Fundamental Economic Concepts Review Economics the study of the allocation of scarce resources We have

Fundamental Economic Concepts Review.doc - Fundamental...

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Fundamental Economic Concepts Review Economics : the study of the allocation of scarce resources. We have limited resources but unlimited wants! Economic decisions always deal with how the best way to ALLOCATE (or use) our scarce resources. All resources are scarce! Resources : The Factors of Production : Inputs – They are LAND(natural resources like water, crude oil, minerals), LABOR (human work), CAPITAL (the tools used by business), and ENTREPRENEURSHIP (risk takers in search of profits). The factors of production are called productive resources cause we use them to produce GOODS & SERVICES! We always want to use our resources efficiently and productively, so we allocate them wisely! Opportunity Cost : The value of the next best alternative not chosen. We always make choices about how to use our resources. All decisions have trade-offs – we make trade-offs with time, money, everything! When we choose one thing over another, the opportunity cost is the thing you lost!
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  • Spring '13
  • Bolinger

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