Choice in a World of Scarcity (Economics)

Recall cards on how scarcity forces choice. The budget constraint: the combinations of two goods a consumer can afford (the Alphonso burgers-and-bus-tickets example), opportunity cost as the next best alternative given up, the slope of the budget line, marginal analysis, the law of diminishing marginal utility, utility maximization, and why sunk costs should not affect current decisions. The production possibilities frontier (PPF): attainable versus unattainable points, productive and allocative efficiency, the law of increasing opportunity cost, why the PPF bows outward, and comparative advantage. Confronting objections to the economic approach: positive versus normative statements, the self-interest assumption and Adam Smith's caveat, and economics as a descriptive rather than prescriptive analysis of behavior.