AGES - Unit # 3 Foundations of Economics

the study of how people choose to use their limited resources to satisfy their unlimited wants

• Economics

• Trade-off

• Public Goods

• Scarcity

the condition that results because people have limited resources but unlimited wants

• Trade-off

• Incentive

• Scarcity

• Utility

the exchange of one benefit or advantage for another that is thought to be better

• Incentive

• Trade-off

• Cost-Benefit Analysis

• Invisible Hand

a way to compare the costs of an action with the benefits of that action; if benefits exceed costs, then the action is worth taking

• Cost-Benefit Analysis

• Incentive

• Opportunity Cost

• Barter

something that motivates a person to take a particular course of action

• Entrepreneurship

• Voluntary Exchange

• Incentive

• Marginal Benefit

what is gained by adding one more unit to an activity

• Incentive

• Utility

• Marginal Cost

• Marginal Benefit

what is given up by adding one more unit to an activity

• Cost-Benefit Analysis

• Invisible Hand

• Marginal Cost

• Marginal Benefit

an arrangement that brings buyers and sellers together to do business with each other

• Market

• Goods

• Services

• Target

Adam Smith’s metaphor to explain how an individual’s pursuit of economic self-interest can promote the well-being of society as a whole

• Market

• Invisible Hand

• Opportunity Cost

• Division of Labor

a physical article that has been produced for sale or use

• Good

• Service

• Barter

• Public Goods