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How does economics help people understand how to allocate their resources efficiently and effectively between their needs and wants?
Answer:
Answer by Student
-
Economics is the study of how people use their
things
to get what they
need and want
. Things are the
stuff
that people can use to make or do other things, such as land, workers, machines, and ideas. Needs and wants are the
things
that people
must have or like to have
, such as food, water, house, school, fun, etc.
-
Economics helps people understand how to use their things
wisely and well
between their needs and wants by teaching them about
scarcity
,
choice
,
opportunity cost
, and
markets
.
-
Scarcity is when there are
not enough things
for all the needs and wants of people. Scarcity makes people
choose
how to use their things.
-
Choice is when people
pick one thing
from among many things. Choice means
comparing
the good and bad of different things and picking the best one.
-
Opportunity cost is what people
give up
when they make a choice. Opportunity cost shows what people
lose or miss out
when they make a choice.
- Markets are places where people buy and sell things for money or other things. Markets use prices to show how much people value different things. People will pay more money for things that they want more. People will use more things to make or do things that have more money.
