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Ch 1: Scarcity, Choice, and the Production Possibilities Curve

About This Chapter

Watch economics video lessons to learn about scarcity, opportunity cost and the production possibilities model. Each lesson is accompanied by a short multiple-choice quiz you can use to check your understanding of these concepts.

Scarcity, Choice, and The Production Possibilities Curve

At the heart of economics is the idea of production and demand. These video lessons will touch on some important ideas that revolve around the availability of goods or services. Ideas, such as scarcity, choice and production possibilities, are explained through our lessons so that you can become familiar with these key economic concepts.

Scarcity is the idea of limited choice that is based upon limited availability of goods or services. You'll learn in these lessons how scarcity can force individuals to make tough choices due to the limited availability of items. The lesson will also explain the relationship between scarcity and choice.

Another concept covered in our lessons is opportunity cost. This economic concept is explained in understandable terms, so that you can see how it relates to scarcity and choice. Discover how opportunity cost arises from the major decisions made in economic situations and see real examples of how it works in the market to solidify your understanding of the concept. Also learn how to calculate the opportunity cost, so that you may apply it to situations on your own.

Lessons will finish up by introducing the production possibilities model. This model will be explained, so you can understand how it works, how it is used and why it is used. You'll study the concept and learn to use it to determine the most efficient production methods. In addition, lessons will cover the production possibilities curve. You'll see how shifts in the curve cause changes and discover the particular role technology plays in the curve. Thanks for watching our lessons!

6 Lessons in Chapter 1: Scarcity, Choice, and the Production Possibilities Curve
Economic Scarcity and the Function of Choice

1. Economic Scarcity and the Function of Choice

Discover the foundation of the social science of economics as we explore the basic economic problem of scarce resources and unlimited wants using key definitions that create a framework for understanding everyday behavior in a nation.

Opportunity Cost: Definition & Real World Examples

2. Opportunity Cost: Definition & Real World Examples

Learn the most important concept of economics through the use of real-world scenarios that highlight both the benefits and the costs of decisions. Opportunity cost is a simple yet powerful principle that reveals how to make the best economic decisions possible, and it explains why people make the choices they do.

How to Calculate Opportunity Cost

3. How to Calculate Opportunity Cost

Learn the formula that reveals the economic value in any major choice between two possibilities. Every choice involves tradeoffs, and opportunity cost shows you how to measure these tradeoffs.

Applying the Production Possibilities Model

4. Applying the Production Possibilities Model

Producers in the economy use a visual model, called the production possibilities curve, to make the most efficient production decisions and maximize output. Learn how this model reveals the tradeoffs of every production decision with the simplified example of an economy that produces only two goods.

Shifts in the Production Possibilities Curve

5. Shifts in the Production Possibilities Curve

In this lesson you will learn how changes inside an economy lead to changes in the production possibilities of a nation. See how different scenarios from everyday life lead to shifts in the production possibilities curve.

Opportunity Cost: Formula & Analysis

6. Opportunity Cost: Formula & Analysis

A fundamental economic analysis - whether you're running a country, a business or your personal finances - determines the opportunity costs of a decision. In this lesson, you'll learn about opportunity cost, its formula and how to calculate it.

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