Definition and key terms

• What is economics?

  It is the study of how human beings strive to satisfy their unlimited wants(infinite) using scarce/limited/finite resources.
• Scale of preference

  A list of items starting from the most important to least important item.
• Choice


  Selecting an item from a list of many other items
• Opportunity cost


  Second best altrernative foregone when a choice is made.
• Needs

  Basic requirements for human surivival
• Wants

  Peoples desires that humans can do without. They are unlimited and people always want more
• Resources

  Factors of production that are used to produce goods and services
• Renewable resources


  Resources that can be renewed by nature. They cannot be depleted or exhausted.
• Example of renewable resources

  Solar energy and wind power
• Examples of renewable resources that can go extinct if they are not protected

  Forests and fish
• Non-renewable resources


  Resources that cannot be replaced once depleted.
• Examples of non-renewable resources

  Coal, diamonds and oil
• Economic problem


  It occurs because the world's resources are scarce and people's wants are unlimited.