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Defining Economic Terms:Scarcity, Trade-offs, and Opportunity Costs
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Hey guys, let's go ahead and define some key terms that will help us understand and answer the question, what is economics? So our first term here scarcity, It's the idea that in this world we have unlimited wants, but only limited resources to fulfill those wants, right? So for example, you know my wants, I want a new guitar. I love to travel shoot. I'd even love to go to the moon, but it's gonna be kind of tough. Right? What kind of resources do I have? I definitely don't have a spaceship, so that's not gonna be happening any time soon. I've got my time. So if I want to travel, yeah, I have the time for it. But what about the money? I don't have the money right now. I've got, well, I've got my empty bank account. At least I have that. Maybe I can put some money in it eventually. So that's the idea, right? We're gonna have to pick our battles here. We've only got limited resources and we've got all sorts of things that we're gonna want in this world. It kind of leads us to our next topic. Trade offs. It's the idea that we have to give up one thing to get something else. So for example, tonight I've been planning to go to the panthers game with my dad for a while here. Panthers, the florida panthers, that's our hockey team down here. Um and just last night, my friend calls me that there's a big party happening tonight and all my friends are gonna be there. Well, I'm gonna have to pick one or the other here, right? And I'm spoiler alert, I'm not gonna sell out my dad, so I'll go to the panthers game tonight. Um but it's not always two things that we're choosing between. Um what if it's your day off and you just want to go to the beach? Right? Maybe you got the day off, let's go to the beach. What are you giving up to go to the beach? Well, the opportunity to just stay home, right? You could have just stayed home instead, just relaxed at home. So, you know, there's always something you're giving up and that's the idea of an opportunity cost the value of the next best alternative to a choice, Right? So a good example is something you'll probably relate to going to college, right? When you go to college, um you're giving up the opportunity to get a full time job right away, right? Um Maybe some of you have part time jobs, I'm sure a lot of you are full time students too though. Uh the idea here is that when you go to college, yes, you have all the cost of college tuition fees, room and board books, Right? But there's also the opportunity cost of having gotten a job right away. So you're giving up all that money you could have already been making. So with these concepts, let's define economics