{"id":11149,"date":"2017-04-17T19:28:37","date_gmt":"2017-04-17T19:28:37","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/introbusinesswmopen2\/?post_type=chapter&#038;p=11149"},"modified":"2017-07-18T20:15:48","modified_gmt":"2017-07-18T20:15:48","slug":"what-is-economics","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-wmopen-introbusiness\/chapter\/what-is-economics\/","title":{"raw":"What Is Economics?","rendered":"What Is Economics?"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li>Explain scarcity<\/li>\r\n \t<li>Explain\u00a0opportunity cost<\/li>\r\n \t<li>Explain division of labor and specialization<\/li>\r\n \t<li>Distinguish between macroeconomics and microeconomics<\/li>\r\n<\/ul>\r\n<\/div>\r\n<h2 class=\"entry-title\">Scarcity and Choice<\/h2>\r\nThroughout this chapter\u00a0you\u2019ll encounter short videos that explain complex economic concepts in very simple terms. Take the time to watch them! They\u2019ll help you master the basics\u00a0before heading to the readings (which tend to cover the same information in more depth).\r\n\r\nhttps:\/\/youtu.be\/yoVc_S_gd_0?t=1s\r\n\r\nAs you watch the video, consider the following key points:\r\n<ol>\r\n \t<li>Economics is the study of how humans make choices under conditions of scarcity.<\/li>\r\n \t<li>Scarcity\u00a0exists when human wants for goods and services exceed the available supply.<\/li>\r\n \t<li>People make decisions in their own self-interest, weighing benefits and costs.<\/li>\r\n<\/ol>\r\n<h2>Understanding Scarcity and Economics<\/h2>\r\n<a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1511\/2016\/05\/10202218\/7115229223_9dee762474_k.jpg\" rel=\"attachment wp-att-5170\"><img class=\"wp-image-5170 aligncenter\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2016\/07\/27162909\/7115229223_9dee762474_k-1024x517.jpg\" alt=\"Photo of Kansas summer wheat and storm panorama: dark purplish sky, brilliant golden wheat field.\" width=\"601\" height=\"303\" \/><\/a>\r\n<h3>Scarcity<\/h3>\r\nThe resources that we value\u2014time, money, labor, tools, land, and raw materials\u2014exist in limited supply. There are simply never enough resources to meet all our needs and desires. This condition is known as\u00a0scarcity.\r\n\r\nAt any moment\u00a0in time, there is a finite amount of resources available. Even when the number of resources is very large, it's limited. For example, according to the U.S. Bureau of Labor Statistics, in 2016, the labor force in the United States contained more than\u00a0158 million workers\u2014that's a lot, but it's not infinite. Similarly, the total area of the United States is 3,794,101 square miles\u2014an impressive amount\u00a0of acreage, but not endless. Because these resources are limited, so are the numbers of goods and services we can produce with them. Combine this with the fact that human wants seem to be virtually infinite, and you can see why scarcity is a problem.\r\n<h3>Economics<\/h3>\r\nWhen faced with limited resources, we have to make choices. Again, economics is the study of how humans make choices under conditions of scarcity. These decisions can be made by individuals, families, businesses, or societies.\r\n\r\nLet's consider a few decisions that we make based on limited resources. Take the following:\r\n<p style=\"padding-left: 30px;\">1. What classes are you taking this term?<\/p>\r\nAre you the lucky student who is taking every class you wanted with your first-choice\u00a0professor during the perfect time and at\u00a0the ideal\u00a0location? The odds are that you have probably had to make trade-offs\u00a0on account\u00a0of scarcity. There is\u00a0a limited number of time slots each day\u00a0for classes and only so many faculty available to teach them.\u00a0Every faculty member can't be assigned to every time slot. Only one class can be assigned to each classroom at a given time. This means that each student has to make trade-offs between the time slot, the instructor, and the class location.\r\n<p style=\"padding-left: 30px;\">2. Where do you live?<\/p>\r\nThink for a moment, if you had all the money in the world, where would you live? It's probably not where you're\u00a0living today. You have probably made a housing decision based on scarcity. What location did you pick? Given limited time, you may have chosen to live close\u00a0to work or school. Given\u00a0the demand for housing, some locations are more expensive than others, though, and you may have chosen to spend more money for a convenient location or to spend less money for a place that leaves you spending more time on transportation. There is a limited amount of housing in any location, so you are forced to choose from\u00a0what's available at any time. Housing decisions always have to take into account what someone can afford. Individuals making decisions about where to live must deal with limitations of financial resources, available housing options, time, and often other restrictions\u00a0created by builders, landlords, city planners, and government regulations.\r\n<h3><span class=\"cnx-gentext-section cnx-gentext-t\">The Problem of Scarcity<\/span><\/h3>\r\nEvery society, at every level, must make choices about how to use its resources. Families must decide whether to spend their money on a new car or a fancy vacation. Towns must choose whether to put more of the budget into police and fire protection or into the school system. Nations must decide whether to devote more funds to national defense or to protecting the environment. In most cases, there just isn't enough money in the budget to do everything.\r\n\r\nEconomics helps us understand the decisions that\u00a0individuals, families, businesses, or societies make, given the fact that there are never enough resources to address all needs and desires.\r\n<h2>The Concept of Opportunity Cost<\/h2>\r\n<h2><a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1511\/2016\/05\/10211550\/5355424756_c50d1db307_b.jpg\" rel=\"attachment wp-att-5175\"><img class=\"wp-image-5175 aligncenter\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2016\/07\/27162913\/5355424756_c50d1db307_b-1024x683.jpg\" alt=\"Photo of two doors, one painted bright blue, the other painted red.\" width=\"600\" height=\"400\" \/><\/a><\/h2>\r\n<h3>The Idea of Opportunity Cost<\/h3>\r\nSince resources are limited, every time you make a choice about how to use them, you are also choosing to forego other options. Economists use the term <strong>opportunity cost<\/strong> to indicate what must be given up to obtain something that's desired. A fundamental principle of economics is that every choice has an opportunity cost. If you sleep through your economics class (not recommended, by the way), the opportunity cost is the learning you miss. If you spend your income on video games, you cannot spend it on movies. If you choose to marry one person, you give up the opportunity to marry anyone else. In short, opportunity cost is all around us.\r\n\r\nThe idea behind opportunity cost is that the cost of one item is the lost opportunity to do or consume something else; in short, opportunity cost is the value of the next best alternative.\r\n\r\nSince people must choose, they inevitably face trade-offs in which they have to give up things they desire to get other things they desire more.\r\n<h3>Opportunity Cost and Individual Decisions<\/h3>\r\nIn some cases, recognizing\u00a0the opportunity cost can alter personal behavior. Imagine, for example, that you spend $8 on lunch every day at work. You may know perfectly well that bringing a lunch from home would cost only $3 a day, so the opportunity cost of buying lunch at the restaurant is $5 each day (that is, the $8 that buying lunch costs minus the $3 your lunch from home would cost). Five dollars each day does not seem to be that much. However, if you project what that adds up to in a year\u2014250 workdays a year \u00d7 $5 per day equals $1,250\u2014it's the cost, perhaps, of a decent vacation. If the opportunity cost were described as \"a nice vacation\" instead of \"$5 a day,\" you might make different choices.\r\n<h3 class=\"linkitup\">Opportunity Cost and\u00a0Societal Decisions<\/h3>\r\n<div class=\"linkitup\">\r\n\r\nOpportunity cost also comes into play with societal decisions. Universal health care would be nice, but the opportunity cost of such a decision would be less housing, environmental protection, or national defense. These trade-offs also arise\u00a0with government policies. For example, after the terrorist plane hijackings on September 11, 2001, many proposals, such as the following,\u00a0were made\u00a0to improve air travel safety:\r\n<ul>\r\n \t<li>The federal government could\u00a0provide armed \"sky marshals\" who would travel inconspicuously with the rest of the passengers.\u00a0The cost of having a sky marshal on every flight would be roughly $3 billion per year.<\/li>\r\n \t<li>Retrofitting all U.S. planes with reinforced cockpit doors to make it harder for terrorists to take over the plane would have a price tag of $450 million.<\/li>\r\n \t<li>Buying more sophisticated security equipment for airports, like three-dimensional baggage scanners and cameras linked to face-recognition software, would\u00a0cost another $2 billion.<\/li>\r\n<\/ul>\r\n[caption id=\"attachment_5262\" align=\"alignright\" width=\"250\"]<a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1511\/2016\/05\/13191116\/121934826_f1ebb9439c_o.jpg\" rel=\"attachment wp-att-5262\"><img class=\"wp-image-5262\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2016\/07\/27162916\/121934826_f1ebb9439c_o.jpg\" alt=\"Pastel drawing of an hour glass. A faceless man is shown in the top half, running to avoid falling through, with the sand, to the bottom.\" width=\"250\" height=\"250\" \/><\/a> Lost time can be a significant component of opportunity cost.[\/caption]\r\n\r\n<\/div>\r\nHowever, the single biggest cost of greater airline security doesn't\u00a0involve money. It's the opportunity cost of additional waiting time at the airport. According to the United States Department of Transportation, more than 800 million passengers took plane trips in the United States in 2012. Since the 9\/11 hijackings, security screening has become more intensive, and consequently, the procedure takes longer than in the past. Say that, on average, each air passenger spends an extra 30 minutes in the airport per trip. Economists commonly place a value on time to convert an opportunity cost in time into a monetary figure. Because many air travelers are relatively\u00a0highly paid businesspeople, conservative estimates set the average \"price of time\" for air travelers at $20 per hour. Accordingly, the opportunity cost of delays in airports could be as much as 800 million (passengers) \u00d7 0.5 hours \u00d7 $20\/hour\u2014or, $8 billion per year. Clearly, the opportunity costs of waiting time can be just as substantial\u00a0as costs involving direct spending.\r\n\r\nhttps:\/\/youtu.be\/PSU-_n81QT0\r\n<h2>Division of Labor and Specialization<\/h2>\r\n[caption id=\"attachment_5644\" align=\"aligncenter\" width=\"601\"]<a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1511\/2016\/05\/24220623\/4643862950_ec302c6046_o.jpg\" rel=\"attachment wp-att-5644\"><img class=\"wp-image-5644\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2016\/07\/27162920\/4643862950_ec302c6046_o-1024x682.jpg\" alt=\"Photograph of factory workers for a shoe company working separately on individualized tasks.\" width=\"601\" height=\"400\" \/><\/a> Assembly Line[\/caption]\r\n\r\n<div id=\"post-3323\" class=\"type-1 post-3323 chapter type-chapter status-publish hentry\">\r\n<div class=\"entry-content\">\r\n<h3>The Division and Specialization of Labor<\/h3>\r\nWe have learned that there aren't\u00a0enough resources to fulfill all of our wants and this reality forces\u00a0us to make choices that have opportunity costs. How do we get the most we can from the resources we have? Over time, markets and trade have come into existence and have become highly efficient mechanisms for optimizing our use of resources and bringing us the most and best combination of goods and services.\r\n\r\nThink back to pioneer days, when the average person\u00a0knew how to do so much more on his or her own than someone today\u2014everything from shoeing a horse to growing, hunting, and preserving food\u00a0to building a house and repairing equipment. Most of us don't know how to do all\u2014or any\u2014of those things. It's not because we're not capable of learning them. It's because we don't have to. The reason for this\u00a0is something called<strong>\u00a0<\/strong><span class=\"emphasis\">the\u00a0\"division and specialization of labor<\/span>,\" a production innovation first put forth by Adam Smith.\r\n\r\nThe formal study of economics began when Adam Smith (1723\u20131790) published his famous book,\u00a0<span class=\"emphasis\"><em>The Wealth of Nations,<\/em><\/span> in 1776. Many authors had written about economics in the centuries before Smith, but he was the first to address the subject in a comprehensive way.\r\n\r\n<a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1511\/2016\/05\/10225341\/5785609636_b2c37ed258_b.jpg\" rel=\"attachment wp-att-5184\"><img class=\"wp-image-5184 alignright\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2016\/07\/27162924\/5785609636_b2c37ed258_b-1024x768.jpg\" alt=\"Card full of old pins, in a row.\" width=\"249\" height=\"187\" \/><\/a>\r\n\r\nIn the first chapter of the book, Smith introduces the idea of the\u00a0<strong>division of labor<\/strong>, which means that the way a good or service is produced is divided into a number of tasks that are performed by different workers, instead of all the tasks being performed\u00a0by the same person. To illustrate the division of labor, Smith counted how many tasks were involved\u00a0in making a pin: drawing out a piece of wire, cutting it to the right length, straightening it, putting a head on one end and a point on the other, packaging pins for sale, and so on. Smith counted <em>eighteen<\/em> distinct tasks that were typically\u00a0performed\u00a0by different people\u2014all for a pin!\r\n\r\nModern companies\u00a0divide tasks, too. Even a relatively simple business like a restaurant divides up the task of serving meals into a range of jobs:\u00a0top chef, sous chefs, less-skilled kitchen help, host\/hostess, waiters\/waitresses, janitors, a business manager to handle accounts and paychecks, etc. A complex business like a large manufacturing factory or a hospital can have hundreds of job classifications.\r\n<h4>Why the Division of Labor Increases Production<\/h4>\r\nWhen the tasks involved with producing a good or service are divided and subdivided, workers and businesses can produce a greater quantity of those\u00a0<span style=\"color: #000000;\">goods or services<\/span>. In his study\u00a0of pin factories, Smith observed that one worker alone might make twenty pins in a day, but that a small business of ten workers (some of whom would need to do two or three of the eighteen tasks involved in\u00a0pin making), could make forty-eight thousand\u00a0pins in a day. How can a group of workers, each specializing in certain tasks, produce so much more than the same number of workers who try to produce the entire good or service by themselves? Smith offered three reasons.\r\n\r\nFirst,\u00a0<strong>specialization<\/strong> in a particular small job allows workers to focus on the parts of the production process in which\u00a0they have an advantage.\u00a0People have different skills, talents, and interests, so they will be better at some jobs than at others. The particular advantages may be based on educational choices, which are shaped, in turn, by interests and talents. Only those with medical training\u00a0qualify to become doctors, for instance. For some goods, specialization will be affected by geography\u2014it's easier to be a wheat farmer in North Dakota than in Florida, but easier to run a tourist hotel in Florida than in North Dakota. If you live in or near a big city, it's easier to attract enough customers to operate a successful dry-cleaning business or movie theater than if you live in a sparsely populated rural area. Whatever the reason, if people specialize in the production of what they do best, they will be more productive than if they produce a combination of things, some of which they are good at and some of which they are not.\r\n\r\nSecond, workers who specialize in certain tasks often learn to produce more quickly and with higher quality. This pattern holds true for many workers, including assembly-line laborers who build cars, stylists who cut hair, and doctors who perform heart surgery. In fact, specialized workers often know their jobs well enough to suggest innovative ways to do their work faster and better. A similar pattern often operates within businesses. In many cases, a business that focuses on one or a few products is more successful than firms that try to make a wide range of products.\r\n\r\nThird, specialization allows businesses to take advantage of <strong>economies of scale<\/strong>, which means that, for many goods, as the level of production increases, the average cost of producing each individual unit declines. For example, if a factory produces only one hundred\u00a0cars per year, each car will be quite expensive to make on average. However, if a factory produces fifty thousand\u00a0cars each year, then it can set up an assembly line with huge machines and workers performing specialized tasks, and the average cost of production per car will drop.\u00a0Economies of scale implies\u00a0that production is becoming more efficient as the scale of production rises.\r\n\r\nThe ultimate result of workers who can focus on their preferences and talents, learn to do their specialized jobs better, and work in larger organizations is that society as a whole can produce and consume far more than if each person tried to produce all of their own goods and services. The division and specialization of labor has been a force against the problem of scarcity.\r\n<div class=\"entry-content\">\r\n<h3>Trade and Markets<\/h3>\r\nSpecialization only makes sense, though, if workers (and other economic agents such as businesses and nations) can use their income to purchase the other goods and services they need. In short, specialization requires trade. You do not have to know anything about electronics or sound systems to play music\u2014you just buy an iPod or MP3 player, download the music, and listen. You don't\u00a0have to know anything about textiles\u00a0or the construction of sewing machines if you need a jacket\u2014you just buy the jacket and wear it. Instead of trying to acquire all the knowledge and skills involved in producing all of the goods and services that you wish to consume, the market allows you to learn a specialized set of skills and then use the pay you receive to buy the goods and services you need or want. This is how our modern society has evolved into a strong economy.\r\n<h2>Microeconomics and Macroeconomics<\/h2>\r\nhttps:\/\/youtu.be\/w8tUIq7Blsg\r\n\r\n<a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1511\/2016\/05\/25200412\/14951665915_eefe941b11_k.jpg\" rel=\"attachment wp-att-5668\"><img class=\"wp-image-5668 aligncenter\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2016\/07\/27162927\/14951665915_eefe941b11_k-1024x629.jpg\" alt=\"Photo of a clear lake with mountains in the distance reflected in the water. Blue sky, a few clouds.\" width=\"601\" height=\"369\" \/><\/a>\r\n\r\nIt should be clear by now that economics covers a lot of ground. That ground can be divided into two parts: <strong>Microeconomics<\/strong> focuses on the actions of individual agents within the economy, like households, workers, and businesses; <strong>macroeconomics<\/strong> looks at the economy as a whole. It focuses on\u00a0broad issues such as growth, unemployment, inflation, and trade balance. Microeconomics and macroeconomics are not separate subjects\u00a0but are, rather,\u00a0complementary perspectives on the overall subject of the economy.\r\n\r\nTo understand why both microeconomic and macroeconomic perspectives are useful, consider the problem of studying a biological ecosystem like a lake. One person who sets out to study the lake might focus on specific\u00a0topics: certain kinds of algae or plant life; the characteristics of particular fish or snails; or the trees surrounding the lake. Another person might take an overall view and instead consider the entire ecosystem of the lake from top to bottom: what eats what, how the system remains\u00a0in balance, and what environmental stresses affect this balance. Both approaches are useful, and both researchers study\u00a0the same lake, but the viewpoints are different. In a similar way, both microeconomics and macroeconomics study the same economy, but each has a different starting point,\u00a0perspective, and focus.\r\n\r\nWhether you are looking at lakes or economics, the micro and the macro insights should illuminate each\u00a0other. In studying a lake, the\u00a0\"micro\" insights about particular plants and animals help us to understand\u00a0the overall food chain, while the \"macro\" insights about the overall food chain help to explain the environment in which individual plants and animals live.\r\n\r\nIn economics, the micro decisions of individual businesses are influenced by the health of the macroeconomy\u2014for example, firms will be more likely to hire workers if the overall economy is growing. In turn, the performance of the macroeconomy ultimately depends on the microeconomic decisions made by individual households and businesses.\r\n<h3>Microeconomics<\/h3>\r\nWhat determines how households and individuals spend their budgets? What combination of goods and services will best fit their needs and wants, given the budget they have to spend? How do people decide whether to work, and if so, whether to work full time or part time? How do people decide how much to save for the future, or whether they should borrow to spend beyond their current means?\r\n\r\nWhat determines the products, and how many of each, a firm will produce and sell? What determines what prices a firm will charge? What determines how a firm will produce its products? What determines how many workers it will hire? How will a firm finance its business? When will a firm decide to expand, downsize, or even close? In the microeconomic part of this text, we will learn about the theory of consumer behavior and the theory of the firm.\r\n<h3>Macroeconomics<\/h3>\r\nWhat determines the level of economic activity in a society or nation?\u2014that is, how many goods and services does it actually produce? What determines how many jobs are available in an economy? What determines a nation's standard of living? What causes the economy to speed up or slow down? What causes firms to hire more workers or lay them off? Finally, what causes the economy to grow over the long term?\r\n\r\nAn economy's macroeconomic health can be assessed\u00a0by a number of standards or goals. The most important macroeconomic goals are the following:\r\n<ul>\r\n \t<li>Growth in the standard of living<\/li>\r\n \t<li>Low unemployment<\/li>\r\n \t<li>Low inflation<\/li>\r\n<\/ul>\r\nMacroeconomic policy pursues these goals through monetary policy and fiscal policy:\r\n<ul>\r\n \t<li><strong>Monetary policy<\/strong>, which involves policies that affect bank lending, interest rates, and financial capital markets, is conducted by a nation's central bank. For the United States, this is the Federal Reserve.<\/li>\r\n \t<li><strong>Fiscal policy<\/strong>, which involves government spending and taxes, is determined by a nation's legislative body. For the United States, this is the Congress and the executive branch, which establishes\u00a0the federal budget.<\/li>\r\n<\/ul>\r\nTo keep\u00a0the differences between these policies straight, remember\u00a0that the term <em>monetary<\/em> relates to money, and the term <em>fiscal<\/em> relates to government revenue or taxes.\r\n\r\nThese are the main tools the government has to work with. Americans tend to expect that government can fix whatever economic problems we encounter, but to what extent is that expectation realistic? These are just some of the issues that will be explored later in this course.\r\n<h2>Check Your Understanding<\/h2>\r\nAnswer the question(s) below to see how well you understand the topics covered above. This short quiz does <strong>not<\/strong> count toward your grade in the class, and you can retake it an unlimited number of times.\r\n\r\nUse this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.\r\n\r\nhttps:\/\/assessments.lumenlearning.com\/assessments\/2966\r\n\r\n&nbsp;\r\n\r\n<\/div>\r\n<\/div>\r\n<\/div>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li>Explain scarcity<\/li>\n<li>Explain\u00a0opportunity cost<\/li>\n<li>Explain division of labor and specialization<\/li>\n<li>Distinguish between macroeconomics and microeconomics<\/li>\n<\/ul>\n<\/div>\n<h2 class=\"entry-title\">Scarcity and Choice<\/h2>\n<p>Throughout this chapter\u00a0you\u2019ll encounter short videos that explain complex economic concepts in very simple terms. Take the time to watch them! They\u2019ll help you master the basics\u00a0before heading to the readings (which tend to cover the same information in more depth).<\/p>\n<p><iframe loading=\"lazy\" id=\"oembed-1\" title=\"Episode 2: Scarcity and Choice\" width=\"500\" height=\"375\" src=\"https:\/\/www.youtube.com\/embed\/yoVc_S_gd_0?start=1&#38;feature=oembed\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<p>As you watch the video, consider the following key points:<\/p>\n<ol>\n<li>Economics is the study of how humans make choices under conditions of scarcity.<\/li>\n<li>Scarcity\u00a0exists when human wants for goods and services exceed the available supply.<\/li>\n<li>People make decisions in their own self-interest, weighing benefits and costs.<\/li>\n<\/ol>\n<h2>Understanding Scarcity and Economics<\/h2>\n<p><a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1511\/2016\/05\/10202218\/7115229223_9dee762474_k.jpg\" rel=\"attachment wp-att-5170\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-5170 aligncenter\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2016\/07\/27162909\/7115229223_9dee762474_k-1024x517.jpg\" alt=\"Photo of Kansas summer wheat and storm panorama: dark purplish sky, brilliant golden wheat field.\" width=\"601\" height=\"303\" \/><\/a><\/p>\n<h3>Scarcity<\/h3>\n<p>The resources that we value\u2014time, money, labor, tools, land, and raw materials\u2014exist in limited supply. There are simply never enough resources to meet all our needs and desires. This condition is known as\u00a0scarcity.<\/p>\n<p>At any moment\u00a0in time, there is a finite amount of resources available. Even when the number of resources is very large, it&#8217;s limited. For example, according to the U.S. Bureau of Labor Statistics, in 2016, the labor force in the United States contained more than\u00a0158 million workers\u2014that&#8217;s a lot, but it&#8217;s not infinite. Similarly, the total area of the United States is 3,794,101 square miles\u2014an impressive amount\u00a0of acreage, but not endless. Because these resources are limited, so are the numbers of goods and services we can produce with them. Combine this with the fact that human wants seem to be virtually infinite, and you can see why scarcity is a problem.<\/p>\n<h3>Economics<\/h3>\n<p>When faced with limited resources, we have to make choices. Again, economics is the study of how humans make choices under conditions of scarcity. These decisions can be made by individuals, families, businesses, or societies.<\/p>\n<p>Let&#8217;s consider a few decisions that we make based on limited resources. Take the following:<\/p>\n<p style=\"padding-left: 30px;\">1. What classes are you taking this term?<\/p>\n<p>Are you the lucky student who is taking every class you wanted with your first-choice\u00a0professor during the perfect time and at\u00a0the ideal\u00a0location? The odds are that you have probably had to make trade-offs\u00a0on account\u00a0of scarcity. There is\u00a0a limited number of time slots each day\u00a0for classes and only so many faculty available to teach them.\u00a0Every faculty member can&#8217;t be assigned to every time slot. Only one class can be assigned to each classroom at a given time. This means that each student has to make trade-offs between the time slot, the instructor, and the class location.<\/p>\n<p style=\"padding-left: 30px;\">2. Where do you live?<\/p>\n<p>Think for a moment, if you had all the money in the world, where would you live? It&#8217;s probably not where you&#8217;re\u00a0living today. You have probably made a housing decision based on scarcity. What location did you pick? Given limited time, you may have chosen to live close\u00a0to work or school. Given\u00a0the demand for housing, some locations are more expensive than others, though, and you may have chosen to spend more money for a convenient location or to spend less money for a place that leaves you spending more time on transportation. There is a limited amount of housing in any location, so you are forced to choose from\u00a0what&#8217;s available at any time. Housing decisions always have to take into account what someone can afford. Individuals making decisions about where to live must deal with limitations of financial resources, available housing options, time, and often other restrictions\u00a0created by builders, landlords, city planners, and government regulations.<\/p>\n<h3><span class=\"cnx-gentext-section cnx-gentext-t\">The Problem of Scarcity<\/span><\/h3>\n<p>Every society, at every level, must make choices about how to use its resources. Families must decide whether to spend their money on a new car or a fancy vacation. Towns must choose whether to put more of the budget into police and fire protection or into the school system. Nations must decide whether to devote more funds to national defense or to protecting the environment. In most cases, there just isn&#8217;t enough money in the budget to do everything.<\/p>\n<p>Economics helps us understand the decisions that\u00a0individuals, families, businesses, or societies make, given the fact that there are never enough resources to address all needs and desires.<\/p>\n<h2>The Concept of Opportunity Cost<\/h2>\n<h2><a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1511\/2016\/05\/10211550\/5355424756_c50d1db307_b.jpg\" rel=\"attachment wp-att-5175\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-5175 aligncenter\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2016\/07\/27162913\/5355424756_c50d1db307_b-1024x683.jpg\" alt=\"Photo of two doors, one painted bright blue, the other painted red.\" width=\"600\" height=\"400\" \/><\/a><\/h2>\n<h3>The Idea of Opportunity Cost<\/h3>\n<p>Since resources are limited, every time you make a choice about how to use them, you are also choosing to forego other options. Economists use the term <strong>opportunity cost<\/strong> to indicate what must be given up to obtain something that&#8217;s desired. A fundamental principle of economics is that every choice has an opportunity cost. If you sleep through your economics class (not recommended, by the way), the opportunity cost is the learning you miss. If you spend your income on video games, you cannot spend it on movies. If you choose to marry one person, you give up the opportunity to marry anyone else. In short, opportunity cost is all around us.<\/p>\n<p>The idea behind opportunity cost is that the cost of one item is the lost opportunity to do or consume something else; in short, opportunity cost is the value of the next best alternative.<\/p>\n<p>Since people must choose, they inevitably face trade-offs in which they have to give up things they desire to get other things they desire more.<\/p>\n<h3>Opportunity Cost and Individual Decisions<\/h3>\n<p>In some cases, recognizing\u00a0the opportunity cost can alter personal behavior. Imagine, for example, that you spend $8 on lunch every day at work. You may know perfectly well that bringing a lunch from home would cost only $3 a day, so the opportunity cost of buying lunch at the restaurant is $5 each day (that is, the $8 that buying lunch costs minus the $3 your lunch from home would cost). Five dollars each day does not seem to be that much. However, if you project what that adds up to in a year\u2014250 workdays a year \u00d7 $5 per day equals $1,250\u2014it&#8217;s the cost, perhaps, of a decent vacation. If the opportunity cost were described as &#8220;a nice vacation&#8221; instead of &#8220;$5 a day,&#8221; you might make different choices.<\/p>\n<h3 class=\"linkitup\">Opportunity Cost and\u00a0Societal Decisions<\/h3>\n<div class=\"linkitup\">\n<p>Opportunity cost also comes into play with societal decisions. Universal health care would be nice, but the opportunity cost of such a decision would be less housing, environmental protection, or national defense. These trade-offs also arise\u00a0with government policies. For example, after the terrorist plane hijackings on September 11, 2001, many proposals, such as the following,\u00a0were made\u00a0to improve air travel safety:<\/p>\n<ul>\n<li>The federal government could\u00a0provide armed &#8220;sky marshals&#8221; who would travel inconspicuously with the rest of the passengers.\u00a0The cost of having a sky marshal on every flight would be roughly $3 billion per year.<\/li>\n<li>Retrofitting all U.S. planes with reinforced cockpit doors to make it harder for terrorists to take over the plane would have a price tag of $450 million.<\/li>\n<li>Buying more sophisticated security equipment for airports, like three-dimensional baggage scanners and cameras linked to face-recognition software, would\u00a0cost another $2 billion.<\/li>\n<\/ul>\n<div id=\"attachment_5262\" style=\"width: 260px\" class=\"wp-caption alignright\"><a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1511\/2016\/05\/13191116\/121934826_f1ebb9439c_o.jpg\" rel=\"attachment wp-att-5262\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-5262\" class=\"wp-image-5262\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2016\/07\/27162916\/121934826_f1ebb9439c_o.jpg\" alt=\"Pastel drawing of an hour glass. A faceless man is shown in the top half, running to avoid falling through, with the sand, to the bottom.\" width=\"250\" height=\"250\" \/><\/a><\/p>\n<p id=\"caption-attachment-5262\" class=\"wp-caption-text\">Lost time can be a significant component of opportunity cost.<\/p>\n<\/div>\n<\/div>\n<p>However, the single biggest cost of greater airline security doesn&#8217;t\u00a0involve money. It&#8217;s the opportunity cost of additional waiting time at the airport. According to the United States Department of Transportation, more than 800 million passengers took plane trips in the United States in 2012. Since the 9\/11 hijackings, security screening has become more intensive, and consequently, the procedure takes longer than in the past. Say that, on average, each air passenger spends an extra 30 minutes in the airport per trip. Economists commonly place a value on time to convert an opportunity cost in time into a monetary figure. Because many air travelers are relatively\u00a0highly paid businesspeople, conservative estimates set the average &#8220;price of time&#8221; for air travelers at $20 per hour. Accordingly, the opportunity cost of delays in airports could be as much as 800 million (passengers) \u00d7 0.5 hours \u00d7 $20\/hour\u2014or, $8 billion per year. Clearly, the opportunity costs of waiting time can be just as substantial\u00a0as costs involving direct spending.<\/p>\n<p><iframe loading=\"lazy\" id=\"oembed-2\" title=\"Episode 8: Opportunity Cost\" width=\"500\" height=\"375\" src=\"https:\/\/www.youtube.com\/embed\/PSU-_n81QT0?feature=oembed&#38;rel=0\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<h2>Division of Labor and Specialization<\/h2>\n<div id=\"attachment_5644\" style=\"width: 611px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1511\/2016\/05\/24220623\/4643862950_ec302c6046_o.jpg\" rel=\"attachment wp-att-5644\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-5644\" class=\"wp-image-5644\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2016\/07\/27162920\/4643862950_ec302c6046_o-1024x682.jpg\" alt=\"Photograph of factory workers for a shoe company working separately on individualized tasks.\" width=\"601\" height=\"400\" \/><\/a><\/p>\n<p id=\"caption-attachment-5644\" class=\"wp-caption-text\">Assembly Line<\/p>\n<\/div>\n<div id=\"post-3323\" class=\"type-1 post-3323 chapter type-chapter status-publish hentry\">\n<div class=\"entry-content\">\n<h3>The Division and Specialization of Labor<\/h3>\n<p>We have learned that there aren&#8217;t\u00a0enough resources to fulfill all of our wants and this reality forces\u00a0us to make choices that have opportunity costs. How do we get the most we can from the resources we have? Over time, markets and trade have come into existence and have become highly efficient mechanisms for optimizing our use of resources and bringing us the most and best combination of goods and services.<\/p>\n<p>Think back to pioneer days, when the average person\u00a0knew how to do so much more on his or her own than someone today\u2014everything from shoeing a horse to growing, hunting, and preserving food\u00a0to building a house and repairing equipment. Most of us don&#8217;t know how to do all\u2014or any\u2014of those things. It&#8217;s not because we&#8217;re not capable of learning them. It&#8217;s because we don&#8217;t have to. The reason for this\u00a0is something called<strong>\u00a0<\/strong><span class=\"emphasis\">the\u00a0&#8220;division and specialization of labor<\/span>,&#8221; a production innovation first put forth by Adam Smith.<\/p>\n<p>The formal study of economics began when Adam Smith (1723\u20131790) published his famous book,\u00a0<span class=\"emphasis\"><em>The Wealth of Nations,<\/em><\/span> in 1776. Many authors had written about economics in the centuries before Smith, but he was the first to address the subject in a comprehensive way.<\/p>\n<p><a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1511\/2016\/05\/10225341\/5785609636_b2c37ed258_b.jpg\" rel=\"attachment wp-att-5184\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-5184 alignright\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2016\/07\/27162924\/5785609636_b2c37ed258_b-1024x768.jpg\" alt=\"Card full of old pins, in a row.\" width=\"249\" height=\"187\" \/><\/a><\/p>\n<p>In the first chapter of the book, Smith introduces the idea of the\u00a0<strong>division of labor<\/strong>, which means that the way a good or service is produced is divided into a number of tasks that are performed by different workers, instead of all the tasks being performed\u00a0by the same person. To illustrate the division of labor, Smith counted how many tasks were involved\u00a0in making a pin: drawing out a piece of wire, cutting it to the right length, straightening it, putting a head on one end and a point on the other, packaging pins for sale, and so on. Smith counted <em>eighteen<\/em> distinct tasks that were typically\u00a0performed\u00a0by different people\u2014all for a pin!<\/p>\n<p>Modern companies\u00a0divide tasks, too. Even a relatively simple business like a restaurant divides up the task of serving meals into a range of jobs:\u00a0top chef, sous chefs, less-skilled kitchen help, host\/hostess, waiters\/waitresses, janitors, a business manager to handle accounts and paychecks, etc. A complex business like a large manufacturing factory or a hospital can have hundreds of job classifications.<\/p>\n<h4>Why the Division of Labor Increases Production<\/h4>\n<p>When the tasks involved with producing a good or service are divided and subdivided, workers and businesses can produce a greater quantity of those\u00a0<span style=\"color: #000000;\">goods or services<\/span>. In his study\u00a0of pin factories, Smith observed that one worker alone might make twenty pins in a day, but that a small business of ten workers (some of whom would need to do two or three of the eighteen tasks involved in\u00a0pin making), could make forty-eight thousand\u00a0pins in a day. How can a group of workers, each specializing in certain tasks, produce so much more than the same number of workers who try to produce the entire good or service by themselves? Smith offered three reasons.<\/p>\n<p>First,\u00a0<strong>specialization<\/strong> in a particular small job allows workers to focus on the parts of the production process in which\u00a0they have an advantage.\u00a0People have different skills, talents, and interests, so they will be better at some jobs than at others. The particular advantages may be based on educational choices, which are shaped, in turn, by interests and talents. Only those with medical training\u00a0qualify to become doctors, for instance. For some goods, specialization will be affected by geography\u2014it&#8217;s easier to be a wheat farmer in North Dakota than in Florida, but easier to run a tourist hotel in Florida than in North Dakota. If you live in or near a big city, it&#8217;s easier to attract enough customers to operate a successful dry-cleaning business or movie theater than if you live in a sparsely populated rural area. Whatever the reason, if people specialize in the production of what they do best, they will be more productive than if they produce a combination of things, some of which they are good at and some of which they are not.<\/p>\n<p>Second, workers who specialize in certain tasks often learn to produce more quickly and with higher quality. This pattern holds true for many workers, including assembly-line laborers who build cars, stylists who cut hair, and doctors who perform heart surgery. In fact, specialized workers often know their jobs well enough to suggest innovative ways to do their work faster and better. A similar pattern often operates within businesses. In many cases, a business that focuses on one or a few products is more successful than firms that try to make a wide range of products.<\/p>\n<p>Third, specialization allows businesses to take advantage of <strong>economies of scale<\/strong>, which means that, for many goods, as the level of production increases, the average cost of producing each individual unit declines. For example, if a factory produces only one hundred\u00a0cars per year, each car will be quite expensive to make on average. However, if a factory produces fifty thousand\u00a0cars each year, then it can set up an assembly line with huge machines and workers performing specialized tasks, and the average cost of production per car will drop.\u00a0Economies of scale implies\u00a0that production is becoming more efficient as the scale of production rises.<\/p>\n<p>The ultimate result of workers who can focus on their preferences and talents, learn to do their specialized jobs better, and work in larger organizations is that society as a whole can produce and consume far more than if each person tried to produce all of their own goods and services. The division and specialization of labor has been a force against the problem of scarcity.<\/p>\n<div class=\"entry-content\">\n<h3>Trade and Markets<\/h3>\n<p>Specialization only makes sense, though, if workers (and other economic agents such as businesses and nations) can use their income to purchase the other goods and services they need. In short, specialization requires trade. You do not have to know anything about electronics or sound systems to play music\u2014you just buy an iPod or MP3 player, download the music, and listen. You don&#8217;t\u00a0have to know anything about textiles\u00a0or the construction of sewing machines if you need a jacket\u2014you just buy the jacket and wear it. Instead of trying to acquire all the knowledge and skills involved in producing all of the goods and services that you wish to consume, the market allows you to learn a specialized set of skills and then use the pay you receive to buy the goods and services you need or want. This is how our modern society has evolved into a strong economy.<\/p>\n<h2>Microeconomics and Macroeconomics<\/h2>\n<p><iframe loading=\"lazy\" id=\"oembed-3\" title=\"Episode 4: Micro vs Macro\" width=\"500\" height=\"375\" src=\"https:\/\/www.youtube.com\/embed\/w8tUIq7Blsg?feature=oembed&#38;rel=0\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<p><a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1511\/2016\/05\/25200412\/14951665915_eefe941b11_k.jpg\" rel=\"attachment wp-att-5668\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-5668 aligncenter\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2016\/07\/27162927\/14951665915_eefe941b11_k-1024x629.jpg\" alt=\"Photo of a clear lake with mountains in the distance reflected in the water. Blue sky, a few clouds.\" width=\"601\" height=\"369\" \/><\/a><\/p>\n<p>It should be clear by now that economics covers a lot of ground. That ground can be divided into two parts: <strong>Microeconomics<\/strong> focuses on the actions of individual agents within the economy, like households, workers, and businesses; <strong>macroeconomics<\/strong> looks at the economy as a whole. It focuses on\u00a0broad issues such as growth, unemployment, inflation, and trade balance. Microeconomics and macroeconomics are not separate subjects\u00a0but are, rather,\u00a0complementary perspectives on the overall subject of the economy.<\/p>\n<p>To understand why both microeconomic and macroeconomic perspectives are useful, consider the problem of studying a biological ecosystem like a lake. One person who sets out to study the lake might focus on specific\u00a0topics: certain kinds of algae or plant life; the characteristics of particular fish or snails; or the trees surrounding the lake. Another person might take an overall view and instead consider the entire ecosystem of the lake from top to bottom: what eats what, how the system remains\u00a0in balance, and what environmental stresses affect this balance. Both approaches are useful, and both researchers study\u00a0the same lake, but the viewpoints are different. In a similar way, both microeconomics and macroeconomics study the same economy, but each has a different starting point,\u00a0perspective, and focus.<\/p>\n<p>Whether you are looking at lakes or economics, the micro and the macro insights should illuminate each\u00a0other. In studying a lake, the\u00a0&#8220;micro&#8221; insights about particular plants and animals help us to understand\u00a0the overall food chain, while the &#8220;macro&#8221; insights about the overall food chain help to explain the environment in which individual plants and animals live.<\/p>\n<p>In economics, the micro decisions of individual businesses are influenced by the health of the macroeconomy\u2014for example, firms will be more likely to hire workers if the overall economy is growing. In turn, the performance of the macroeconomy ultimately depends on the microeconomic decisions made by individual households and businesses.<\/p>\n<h3>Microeconomics<\/h3>\n<p>What determines how households and individuals spend their budgets? What combination of goods and services will best fit their needs and wants, given the budget they have to spend? How do people decide whether to work, and if so, whether to work full time or part time? How do people decide how much to save for the future, or whether they should borrow to spend beyond their current means?<\/p>\n<p>What determines the products, and how many of each, a firm will produce and sell? What determines what prices a firm will charge? What determines how a firm will produce its products? What determines how many workers it will hire? How will a firm finance its business? When will a firm decide to expand, downsize, or even close? In the microeconomic part of this text, we will learn about the theory of consumer behavior and the theory of the firm.<\/p>\n<h3>Macroeconomics<\/h3>\n<p>What determines the level of economic activity in a society or nation?\u2014that is, how many goods and services does it actually produce? What determines how many jobs are available in an economy? What determines a nation&#8217;s standard of living? What causes the economy to speed up or slow down? What causes firms to hire more workers or lay them off? Finally, what causes the economy to grow over the long term?<\/p>\n<p>An economy&#8217;s macroeconomic health can be assessed\u00a0by a number of standards or goals. The most important macroeconomic goals are the following:<\/p>\n<ul>\n<li>Growth in the standard of living<\/li>\n<li>Low unemployment<\/li>\n<li>Low inflation<\/li>\n<\/ul>\n<p>Macroeconomic policy pursues these goals through monetary policy and fiscal policy:<\/p>\n<ul>\n<li><strong>Monetary policy<\/strong>, which involves policies that affect bank lending, interest rates, and financial capital markets, is conducted by a nation&#8217;s central bank. For the United States, this is the Federal Reserve.<\/li>\n<li><strong>Fiscal policy<\/strong>, which involves government spending and taxes, is determined by a nation&#8217;s legislative body. For the United States, this is the Congress and the executive branch, which establishes\u00a0the federal budget.<\/li>\n<\/ul>\n<p>To keep\u00a0the differences between these policies straight, remember\u00a0that the term <em>monetary<\/em> relates to money, and the term <em>fiscal<\/em> relates to government revenue or taxes.<\/p>\n<p>These are the main tools the government has to work with. Americans tend to expect that government can fix whatever economic problems we encounter, but to what extent is that expectation realistic? These are just some of the issues that will be explored later in this course.<\/p>\n<h2>Check Your Understanding<\/h2>\n<p>Answer the question(s) below to see how well you understand the topics covered above. This short quiz does <strong>not<\/strong> count toward your grade in the class, and you can retake it an unlimited number of times.<\/p>\n<p>Use this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.<\/p>\n<p>\t<iframe id=\"lumen_assessment_2966\" class=\"resizable\" src=\"https:\/\/assessments.lumenlearning.com\/assessments\/load?assessment_id=2966&#38;embed=1&#38;external_user_id=&#38;external_context_id=&#38;iframe_resize_id=lumen_assessment_2966\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:400px;\"><br \/>\n\t<\/iframe><\/p>\n<p>&nbsp;<\/p>\n<\/div>\n<\/div>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-11149\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Introductory Scarcity and Choice Text. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><li>Revision and adaptation. <strong>Authored by<\/strong>: Linda Williams and Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><li>Check Your Understanding. <strong>Authored by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li>Episode 2: Scarcity and Choice. <strong>Authored by<\/strong>: Mary J. McGlasson. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/youtu.be\/yoVc_S_gd_0?t\">https:\/\/youtu.be\/yoVc_S_gd_0?t<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-nc-nd\/4.0\/\">CC BY-NC-ND: Attribution-NonCommercial-NoDerivatives <\/a><\/em><\/li><li>Principles of Microeconomics Chapter 1.1. <strong>Authored by<\/strong>: OpenStax College. <strong>Provided by<\/strong>: Rice University. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"http:\/\/cnx.org\/contents\/ea2f225e-6063-41ca-bcd8-36482e15ef65\">http:\/\/cnx.org\/contents\/ea2f225e-6063-41ca-bcd8-36482e15ef65<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><li>Kansas Summer Wheat and Storm Panorama. <strong>Authored by<\/strong>: James Watkins. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/www.flickr.com\/photos\/23737778@N00\/7115229223\/\">https:\/\/www.flickr.com\/photos\/23737778@N00\/7115229223\/<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><li>Principles of Microeconomics Chapter 2.1. <strong>Authored by<\/strong>: OpenStax College. <strong>Provided by<\/strong>: Rice University. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"http:\/\/cnx.org\/contents\/ea2f225e-6063-41ca-bcd8-36482e15ef65@10.31:24\/Microeconomics\">http:\/\/cnx.org\/contents\/ea2f225e-6063-41ca-bcd8-36482e15ef65@10.31:24\/Microeconomics<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><li>pastel background_detail. <strong>Authored by<\/strong>: Yu Ting Wong. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/www.flickr.com\/photos\/wowyt\/121934826\/\">https:\/\/www.flickr.com\/photos\/wowyt\/121934826\/<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-nc-nd\/4.0\/\">CC BY-NC-ND: Attribution-NonCommercial-NoDerivatives <\/a><\/em><\/li><li>Zwei Tu00fcren \/ Two Doors. <strong>Authored by<\/strong>: Stefan W. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/www.flickr.com\/photos\/stefan-w\/5355424756\/\">https:\/\/www.flickr.com\/photos\/stefan-w\/5355424756\/<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><li>Episode 8: Opportunity Cost. <strong>Authored by<\/strong>: Dr. Mary J. McGlasson. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/youtu.be\/PSU-_n81QT0\">https:\/\/youtu.be\/PSU-_n81QT0<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-nc-nd\/4.0\/\">CC BY-NC-ND: Attribution-NonCommercial-NoDerivatives <\/a><\/em><\/li><li>Principles of Microeconomics Chapter 1.1. <strong>Authored by<\/strong>: OpenStax College. <strong>Provided by<\/strong>: Rice University. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"http:\/\/cnx.org\/contents\/6i8iXmBj@10.170:6RH0nLs4@8\/What-Economics-Is-and-Why-Its-\">http:\/\/cnx.org\/contents\/6i8iXmBj@10.170:6RH0nLs4@8\/What-Economics-Is-and-Why-Its-<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><li>Card of old pins. <strong>Authored by<\/strong>: scrappie annie. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/www.flickr.com\/photos\/14903992@N08\/5785609636\/\">https:\/\/www.flickr.com\/photos\/14903992@N08\/5785609636\/<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-nc\/4.0\/\">CC BY-NC: Attribution-NonCommercial<\/a><\/em><\/li><li>Red Wing Shoes Factory Tour. <strong>Authored by<\/strong>: Nina Hale. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/www.flickr.com\/photos\/94693506@N00\/4643862950\/\">https:\/\/www.flickr.com\/photos\/94693506@N00\/4643862950\/<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><li>Episode 4: Micro v Macro. <strong>Authored by<\/strong>: Dr. Mary J. McGlasson. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/youtu.be\/w8tUIq7Blsg\">https:\/\/youtu.be\/w8tUIq7Blsg<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-nc-nd\/4.0\/\">CC BY-NC-ND: Attribution-NonCommercial-NoDerivatives <\/a><\/em><\/li><li>Principles of Microeconomics Chapter 1.2. <strong>Authored by<\/strong>: OpenStax College. <strong>Provided by<\/strong>: Rice University. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"http:\/\/cnx.org\/contents\/ea2f225e-6063-41ca-bcd8-36482e15ef65@10.31:4\/Microeconomics\">http:\/\/cnx.org\/contents\/ea2f225e-6063-41ca-bcd8-36482e15ef65@10.31:4\/Microeconomics<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><li>Vermilion Lakea. <strong>Authored by<\/strong>: Victor. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/www.flickr.com\/photos\/vic_206\/14951665915\/\">https:\/\/www.flickr.com\/photos\/vic_206\/14951665915\/<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-nc-sa\/4.0\/\">CC BY-NC-SA: Attribution-NonCommercial-ShareAlike<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":26,"menu_order":3,"template":"","meta":{"_candela_citation":"[{\"type\":\"cc\",\"description\":\"Episode 2: Scarcity and Choice\",\"author\":\"Mary J. 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