Econ 201 – Chapter One Notes: Individual Choice: the decision by an individual of what to do, which necessarily involves a decision of what not to do. Ex. We can only fit so much into our dorm room. We might not be able to fit both a refrigerator AND a television. We must choose. Resource: anything that can be used to produce something else. Ex. Land, labor, capital. Resources are scarce: the quantity available isn’t large enough to satisfy all productive uses. Ex. Natural resources. Opportunity Cost: what you must give up in order to get something. Ex. Having the option to taking two classes, but can only fit one into your schedule. You will be missing out on one, but the opportunity cost of taking one will outweigh the other. Trade-Off: a comparison of costs and benefits. Ex. Spending more time studying for one class than another. Marginal Decisions: Decisions about whether to do a bit more or a bit less of an activity.
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