* Basic Definitions
Colander (2010) stated, “Economics is the study of how human beings coordinate their wants and desires, given the decision-making mechanisms, social customs, and political realities of the society” (p. 4). The main word defining “economics” would be coordination, and in economics, refers to three central problems that face any economy and how they are solved. These central problems are
1. What and how much to produce.
2. How to produce it.
3. For whom to produce it (Colander, 2010).
Individuals frequently assume that economics only concern is with business, money, and supply, and demand. However, economics began as a branch of philosophy, and Alfred Marshall, the 19th century economist describes economics as the study of individuals in the business of everyday life. * Scarcity
Colander (2010) stated “scarcity has two elements: our wants and our means of fulfilling those wants. These can be interrelated since wants are changeable and partially determined by society” (p. 5). Scarcity is a basic problem of economics it has apparent limitless individual wants and needs when the world in fact has limited resources. We as a society have scarce creative resources to fulfill everyone’s wants and needs. * TANSTAAFL
Colander (2010) states TANSTAAFL “economic knowledge in one sentence “There ain’t no such thing as a free lunch” (p. 7). This acronym is trying to illustrate the cost of spending and decision making, and expresses that there is always a cost whether hidden or indirect even if it may seem like it is free. * Opportunity Cost
Colander (2010) states “Opportunity cost is the benefit that you might have gained from choosing the next-best alternative. To obtain the benefit of something, you must give up something else. TANSTAAFL theory embodies the opportunity cost concept because it tells us that there is a cost to everything; that cost is the next-best forgone alternative” (p. 9). In economics, the...
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Comparative advantage. (2013). In Merriam-Webster. Retrieved from http://www.merriam-webster.com/dictionary/comparative advantage
Colander, D. C. (2010). Macroeconomics (8th ed.). Boston, MA: McGraw-Hill/Irwin. (pg. 4, 5, 7, 9, 28-29, 158, 171, 184).
Economics. (2013). In Merriam-Webster. Retrieved from http://www.merriam-webster.com/dictionary/economics
Opportunity cost. (2013). In Merriam-Webster. Retrieved from http://www.merriam-webster.com/dictionary/opportunity cost
Scarcity. (2013). In Merriam-Webster. Retrieved from http://www.merriam-webster.com/dictionary/scarcity
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