Econ 101 Chapter 1 Notes

Econ 101 Chapter 1 Notes - Value of the next best thing...

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Econ 101 Chapter 1 -People make purposeful choices with scarce resources, to interact with other people when they make these choices. Economics is mostly the study of how people deal with scarcity. Vocab – Scarcity – A situation in which people’s resources are limited. Choice – To give up one thing in favor of another Economic Interaction – anytime people trade or exchange goods or services Market – An arrangement where buyers and sellers can interact. Budget Constraint – A limit in the amount a buyer can spend Opportunity Cost – the value of the foregone alternative that was not chosen.
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Unformatted text preview: Value of the next best thing Gains from trade – the reallocation of goods between two individuals in which both benefit. Comparative Advantage – A group has a comparative advantage if they can produce the same amount of the good, using fewer resources, less time or effort. International Trade – Economic interaction between groups from different countries. Economic interaction allows for specialization by creating a Division of labor which involves one worker specializing in one task and another in another task....
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