The Fundamental Economic Problem
Scarcity - Resources are limited. Not everyone gets everything they want.
The 3 Fundamental Economic Questions
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What should be produced? - Given limited resources, society must decide which goods and services to produce and in what quantities.
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How should goods and services be produced? - The most efficient methods of production must be determined to best use the available resources.
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For whom should goods and services be produced? - Society must decide who will consume the goods and services. This raises broader questions about fairness and the equitable distribution of resources.
Opportunity Cost
The value of the next best alternative that is given up when a choice is made. (i.e. if you buy a book instead of a Valorant skin that would have given you greater enjoyment for the same price, the opportunity cost is the value of the enjoyment you sacrificed.)
The Study of Economics
Economics is the social science concerned with how individuals and societies manage scarcity and make choices based on opportunity costs.
It assumes individuals try to maximise their own self-interest and make decisions by comparing the additional benefits and costs relative to their current situation (referred to as at the margin).