Chapter 1 - Foundations of Economics

The limited nature of society's resources, given society's unlimited wants and needs

The study of how individuals and societies allocate their limited resources to satisfy their nearly unlimited wants

The study of the individual units that make up the economy

The study of the overall aspects and workings of an economy

Factors that motivate a person to act or exert effort

The highest-valued alternative that must be sacrificed to get something else

A purposeful evaluation of the available opportunities to make the best decision possible

Requires decision-makers to evaluate whether the benefit of one more unit of something is greater than its cost

Bring buyers and sellers together to exchange goods and services

How resources and final goods and services flow through the economy

Involves individuals trading a good they already have or providing a service in exchange for something they want

Occurs when each party in an exchange transaction has what the other party desires

The voluntary exchange of goods and services between two or more parties

Refers to the situation where an individual, business, or country can produce at a lower opportunity cost than a competitor can