Unit 1: Basic Economic Concepts

The condition that results from society not having enough resources to produce all the things people would like to have

• Scarcity

• Opportunity Cost

• Economics

• Private Property

The study of how people try to satisfy what appears to be seemingly unlimited and competing wants through the careful use of relatively scarce resources

• Consumer Sovereignty

• Economics

• Opportunity Cost

• Competition

A basic requirement for survival-i.e, food, clothing, shelter

• Durable Good

• Consumer Good

• Need

• Want

A way of expressing a need -i.e, Need: Food; Want: Pizza

• Want

• Capital

• Entrepreneur

• Economics

A systematic error in thinking that happens when people try to understand the world around them

• Cognitive dissonance
• Logical fallacy
• Cognitive bias
• Heuristic reasoning

A risk-taker in search of profits who does something new with existing resources

• Scarcity

• Competition

• Profit Motive

• Entrepreneur

A cognitive bias that causes people to value items that they own more highly than they would if they did not belong to them

• Confirmation bias
• Endowment effect
• Sunk cost fallacy
• Availability heuristic

The cost of the next best alternative use of money, time, or resources when another choice is made rather than another

• Economics

• Scarcity

• Opportunity Cost

• Capital

The tendency to keep doing something we’ve already invested heavily in (time, money, effort), even when giving up is clearly a better idea.

• Anchoring effect
• Sunk cost fallacy
• Loss aversion
• Confirmation bias

Type of market economy in which the factors of production are privately owned.

• Capitalism

• Communism

• Socialism

• Mixed Economy