Question: What is economics?

Answer: The study of how people allocate their limited resources to satisfy their nearly unlimited wants; the study of how people make decisions

Question: How is scarcity related to economics?

Answer: Scarcity refers to the limited nature of societies unlimited wants and needs

Question: Microeconomics

Answer: Study of individual units that make up the economoy

Question: Macroeconomics

Answer: The study of the overall aspects and workings of an economy

Examples: inflation, growth, employment, interest rates, and economy productivity as a whole

Question: What are incentives?

Answer: Factors that motivate someone to act or exert effort; incentives are everywhere and financial role often plays a prominent role

Question: Positive Incentive

Answer: Encourages action, usually to get something

Examples: tax refund, pay raise, employee of the month award, sticker and a smiley face, extra credit

Question: Negative Incentive

Answer: Encourages action, usually to avoid getting something

Example: taxes, jail, fees, fines, spankings, getting grounded, getting fined, failing class

Question: Direct Incentive

Answer: Easy to recognize

Example: “Get straight A’s and I’ll give you $500.”

Question: Indirect Incentive

Answer: Harder to recognize

Example: Child could cheat to get an A after an offer of $500 to get all A’s

Question: Why do we have to make trade offs?

Answer: Because of scarcity, decisions incur costs

Example: At a theater do you watch an action movie or a romantic comedy?