Fundamentals of Economics
Productive resources are limited and allocated in a variety of different ways. An efficient way to allocate productive resources is through markets.
3. People cannot have all the goods and services they want and, as a result, must choose some things and give up others.
Economics is the study of scarcity, which means that there are unlimited wants, but limited resources. Consequently, individuals must make choices or tradeoffs. What goods, resources and/or services is one willing to give up to obtain another good, resource and/or service?
Making a decision involves an opportunity cost, the value of the next best alternative given up when an economic choice is made. For example, a high school student wants to buy a car. He decides not to try out for the football team in order to get a job to enable him to buy the car. The opportunity cost is playing football.
Expectations for Learning
Use the concepts of tradeoffs, opportunity costs, scarcity and choices to explain why people cannot have all the goods and services they want and, as a result, must choose some things and give up others.