Lesson 2 Lesson 2: Economic Choices
Presented by: Dr. Tawni Ferrarini
Northern Michigan University
Scarcity, Choice, and Opportunity Cost
Every field of study has its own key ideas and ways of thinking. To think like an economist, you have to understand terms such as competition, incentives, scarcity, and opportunity cost. They are central to our daily lives, and integral to a productive economic system. This lesson shows you why.
One of the ways of understanding the consequences of economic decisions is to look at them in terms of the incentives they create, rather than simply the goals they pursue. This means that consequences matter more than intentions—and not just the immediate consequences, but also the longer run repercussions.