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Ch 2: Scarcity, Costs & Production in Economics

About This Chapter

The lesson videos in this chapter will explain the concepts of scarcity, opportunity cost, efficiency and margins. Watch these videos to also learn about calculating opportunity cost, the production possibilities curve and the three basic questions of economics.

Scarcity, Costs & Production in Economics - Chapter Summary

The purpose of the lesson videos in this chapter is to teach you the concepts of scarcity, opportunity cost, efficiency and margins, as well as how they are used to answer the three basic questions of economics: what to produce, how to produce it and who is it for? The specifics you will learn in this chapter include:

  • Defining economics using the concept of scarcity
  • Presence of opportunity cost in decisions
  • The concept of efficiency and the production of goods
  • Factors that cause shifts in the production possibilities curve
  • How traditional, market, command and mixed economies answer the three basic questions of economics
  • Using margins when making economic decisions

If you have any questions on any of the topics in this chapter, ask our instructors for assistance. Also, complete lesson worksheets and take lesson quizzes to fortify the information you have learned and find out what material you have not fully mastered. Review areas of weakness using video tags that will take you to the main topics in the video lessons.

8 Lessons in Chapter 2: Scarcity, Costs & Production in Economics
Test your knowledge with a 30-question chapter practice test
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.

Production in Traditional, Market, Command & Mixed Economic Systems

6. Production in Traditional, Market, Command & Mixed Economic Systems

This lesson discusses how market, traditional, mixed, and command economic systems operate. The key features, benefits, and drawbacks of each are summarized. Learn how the economic systems answer the three basic economic questions that face all economies.

Marginal Analysis in Economics

7. Marginal Analysis in Economics

This lesson explains the economic concept of marginal analysis, which is used in economics to help producers and consumers make economic decisions. Variables, scarcity, marginal benefit and cost, and profit maximization are explained.

Law of Increasing Opportunity Cost: Definition & Concept

8. Law of Increasing Opportunity Cost: Definition & Concept

In this lesson, you will be introduced to the law of increasing opportunity costs. An example is also provided as we walk through the explanation of the law to provide more clarity.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
Not Taken
Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
Not Taken

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