General Economics

Economics is a science. It deals with how products are made, exchanged, and used.

In our society, people want many things. These things are called goods and services. Goods are real, physical objects people want or need. Food, clothes, and toys are all goods. Services are things people want that are not objects. Doctor visits and piano lessons are both services. Sometimes, people and groups of people want the same goods and services. Highways, schools, and health care are some of them.

People use resources to make goods and services. Some resources occur naturally, like fruit, animals, and humans. Some resources that are not natural are computers, machines, and money. Every society has a limited number of resources. Since resources are used to make goods and services, people cannot have every good or service they want. If there is little of one resource, that resource is scarce. If there is a lot of one resource, that resource is abundant.

Many natural resources are used to make goods and services. Different parts of the world have different natural resources. Therefore, certain places specialize in specific goods and services. The type of goods made and services offered depends on the natural resources available.

Opportunity Cost and Trade-Off

People must often decide between one good or another. They question which choice would be better, and why. This is called measuring the trade off. For example, a person might need to make a choice between a car and a truck. One tradeoff might be that a truck can carry large objects. A car cannot. However, all members of the family cannot fit inside of the truck.

Often, people must decide between two or more choices. When they make a choice, the reasons behind the choice are called the opportunity costs. The opportunity cost is the difference bewteen the choice made and the best choice not made.