Scarcity means resources are limited so choices must be made about how to use natural resources, workers, and capital. A trade-off is giving up one thing to get another, like spending on education vs defense. Making choices always has an opportunity cost of forgoing other options.

1. scarcityScarcity means that there is not enough of everything to go around. All resources are limited in supply. Therefore, decisions must be made how best to use natural resources, workers, and capital. Even the U.S. government must make choices. It can not do everything that people want.

2. Trade- OffA trade-off is when one thing is given up in order to get another. For example, the government has to decide whether to spend a billion dollars more on education or a billion more on defense. Scarcity forces us as a society to make choices. Society must decide 1) What goods and services to produce, 2) How these goods and services will be produced, and finally, 3) Who should receive these goods and services

3. Opportunity CostsMaking a choice-any choice, always has some cost. So by spending a certain amount on item A, we are giving up the opportunity to have item B. For example, by going to college to taking out loans to pay for college you are forsaking the opportunity to work, and earn money. Every time you make an economic choice, there is an opportunity cost to you in terms of what you had to give up, or a trade off.

4. Diminishing Marginal ReturnRefers to the fact that as successive units are consumed during a short period of time in which the consumers taste don’t change. The utility of pleasure from each additional unit decreases. Could someone come up with an example.

5. EconomistAn Economist earns his living, studying a nations economic system or its parts. He or she collects data, he then attempts to come up with a generalization about economic performance. He then constructs a model to predict generalization based on certain assumptions.

6. MacroeconomicsSome problems involve the impact of changes on the economy as a whole rather than on an individual part. For example, what will be the effect of an increase in federal spending on consumer spending, and the federal budget?MicroeconomicsSome problems involve the effects of economic forces upon individual parts of the economy, such as business firms, households, and workers. For example, what will to a firms sales if they increase prices