Economics is the study of how people make choices in a world with limited resources (scarcity!) to meet their needs and wants. It looks at how goods and services are produced, distributed, and consumed in our world.

This is a great video to discuss the basic topics that make up economics!

Scarcity, the concept that resources are limited is an integral concept in economics.

Opportunity cost is the value of the next best (important!) thing you give up when you make a choice. It's what you miss out on when you decide to do one thing instead of another. Because scarcity exists, there is always an opportunity cost, and decisions are made to minimize this sacrifice.

Economics assumes that people make choices to maximize their utility, or the satisfaction gained from a good or service. It assumes “rational self-interest,” and making decisions for the most self benefit. Seems logical, right?

Marginal Analysis is the study of the additional benefits and costs of making a small (marginal) change in the level of an activity. It helps people decide whether to do a bit more or a bit less of something by comparing the extra benefits (marginal benefits) to the extra costs (marginal costs). Should you invest in a house? Should I eat another ice cream cone? All of these choices have benefits, of course, but costs as well (the money you spent on the house and the incoming stomach ache). Furthermore, every choice has an opportunity cost– the next best choice foregone.

Economic resources, also known as factors of production, are the inputs used to produce goods and services. They include land (natural resources), labor (human effort), capital (machinery, buildings, tools), and entrepreneurship (the skill to combine these resources to create products and services).

One of the most basic curves to understand is the production possibility curve (PPC). It showcases the combination of goods and services society can produce, assuming full employment, fixed resources and technology, and the existence of only two goods/services.

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