EPF.1a Basic Economic Concepts Vocabulary

Trade-offs

• The act of gaining multiple benefits simultaneously.

• The giving up of one benefit or advantage in order to gain another regarded as more favorable.

• A strategy to avoid making decisions.

• The process of maximizing all available resources.

Resources

• Things that are in unlimited supply.

• Things that are in limited supply and may include personal resources (financial, skill, time) or productive resources (capital resources, human resources, natural resources, and entrepreneurship).

• Things that are only financial in nature.

• Things that are only related to human skills.

marginal cost

• The cost incurred by consuming one more of something

• The total cost of production divided by the number of units produced

• The fixed cost associated with producing a good

• The variable cost that changes with the level of output

Opportunity Cost

• Cost of the next best alternative use of money, time, or resources when one choice is made rather than another.

• The total cost incurred when making a decision.

• The benefits received from the best alternative that is not chosen.

• The amount of money spent on a particular choice.

Decision

• A choice made after evaluating different options and their outcomes.

• A random selection made without any thought.

• An opinion formed without any evidence.

• A statement of fact that does not require any choice.

Choice

• A. Scarcity

• B. Abundance

• C. Surplus

• D. Affluence

marginal benefit

• The total cost of producing a good or service.

• The additional satisfaction gained when consuming an additional unit of the good or service.

• The decrease in satisfaction from consuming less of a good or service.

• The average satisfaction derived from all units consumed.

Wants

• Desires that can be satisfied by consuming a good or service.

• Basic needs for survival such as food and shelter.

• Emotional needs that cannot be fulfilled by material goods.

• Long-term goals that require planning and effort.

PACED Decision-Making Process

• A decision-making process that includes stating the problem, listing alternatives, identifying criteria, evaluating alternatives, and making a decision.

• A method for making decisions based on intuition and gut feelings.

• A process that focuses solely on the financial aspects of decision-making.

• A strategy that encourages group discussions without a structured approach.

Scarcity

• A situation where resources are abundant and wants are limited.

• A situation in which unlimited wants exceed the limited resources available to fulfill those wants.

• A condition where all needs are met without any limitations.

• A scenario where resources are evenly distributed among all individuals.