4 Outcome: What Is Economics?

What you’ll learn to do: explain what economics is and explain why it is important

In order to understand economics it’s important to master a set of key definitions and understand how they interconnect. These concepts will be used many times throughout the course. At the most basic level:

• Scarcity means that there are never enough resources to satisfy all human wants
• Economics is the study of the trade-offs and choices that we make, given the fact of scarcity
• Opportunity cost is what we give up when we choose one thing over another

We will spend more time with these definitions, and understand how they’re used in the context of this discipline.

The specific things you’ll learn in this section include the following:

• Define scarcity and explain its economic impact
• Define opportunity cost
• Define productive resources
• Explain why trade and markets exist
• Distinguish between macroeconomics and microeconomics

Learning Activities

The learning activities for this section include the following:

• Video: Scarcity and Choice
• Reading: Understanding Economics and Scarcity
• Video: Resources
• Reading: The Concept of Opportunity Cost
• Video: Opportunity Cost
• Reading: Labor, Markets, and Trade
• Video: Micro vs. Macro
• Reading: Microeconomics and Macroeconomics
• Self Check: What Is Economics