What is Economics (a brief definition)?

• Economics is the social science that studies scarce resources and the uses that compete for said scarce resources.

[It should be noted that a definition of economics is not required for the CAPE Examinations]

What is Scarcity?

• Scarcity means limited in supply, this is when there is not enough resources to satisfy everyone's wants and needs.

What is Choice?

• A choice in economics, is when firms, governments and households (the economics agents) have to choose which goods and services they will produce or buy and which goods or services they are willing to go without.

What is Opportunity Cost?

• This is defined as the NEXT best alternative FOREGONE.

Real Life Examples to Relate to these terms

Let's say you are at your school cafeteria, you have a total of 10 dollars to spend.

The following options are open to you:

1. A Water for 10 dollars.
2. A sandwich for 10 dollars.

How do the three terms relate to this situation?

• "Scarcity" is present through the fact that you do not have enough money to purchase both products nor is there more resources to satisfy your need/want.
• "Choice" is obvious in the fact that you have to choose which you want to buy and which to go without.
• Lastly, "Opportunity Cost" is present as whichever one you choose, there is an alternative foregone. For instance, if you chose the sandwich, your opportunity cost will be the water and vice versa if the water was chosen.