Chapter 1

Economics is the study of how people and societies choose to use limited resources to satisfy their unlimited wants.

The opportunity cost of an activity is the value of the next-best alternative foregone.

An incentive is a factor that motivates and influences people's decisions and actions.

The basic economic problem is the scarcity of resources, which forces people to make choices about how to allocate them.

Production is the process of creating goods and services, while consumption is the use of goods and services to satisfy wants and needs.

Specialization is the concentration of production on a limited number of goods or tasks, which allows for increased efficiency and productivity.

A market is a mechanism through which buyers and sellers interact to exchange goods and services.

The price of a good or service is determined by the interaction of supply and demand in the market.