Lesson 1.01 The Basic Language of Economics

Before we begin, we need to define some terms you will see in this lesson. You should record these definitions in your journal.

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Scarcity is the basic economic problem that arises because people have unlimited wants but resources are limited. It is because of the problem of scarcity that we have to make choices.

Watch Scarcity (1:13), then take the quiz at the end to check your understanding.

You may not know it, but you use marginal analysisAn examination of the additional benefits of an activity compared to the additional costs of that activity. Companies use marginal analysis as a decision-making tool to help them maximize their profits. Individuals unconsciously use marginal analysis to make a host of everyday decisions. to make everyday decisions, even though you may have never heard of the term. We all want the most from our money and time. The video below will help you start quantifying the process. You will learn that you already were practicing the principles of economics.

Watch Decision Making and Cost-Benefit Analysis (2:56), then take the quiz at the end to check your understanding. Read the transcript

When you have to make a choice, how do you decide what to do? Your choices will work out better for you if you think about them instead of just letting them happen. View PACED Decision Making to learn more about the PACED decision-making process.