• relative scarcity - the comparison of the scarcity of one good, service, or resource to that of another 
• rational decision making based on 
• self interest 
• optimization 
• marginal decision making 
• land resource 
• things found on and under the earth 
• scarcity - the fact that unlimited wants cannot be completely satisfied with limited resources 
• marginal decision making - when you decide to turn of the bedroom light on your way to the kitchen to save money 
• allocation : the action or process of allocating or distributing something 
• entrepenurial ability - the talent or ability to combine land, labor, and capital to produce goals and services 
• how we choose to employ the resources that are available to us ultimately determines which goals and services get produced 
• assuming that people are self- interested recognizes that people will make mistakes 
• physical capital - tangible items created to increase productivity 
• resources - anything that is used to produced a good or service whether it is provided by nature or is manufactured 
• land- all natural resources used in production 
• labor - all physical and mental activity devoted to producing goods and services 
•  increasing marginal cost describes the positivitie relationship between the marginal cost associated with the use of a good or a service and quantity produced 
• economics: the study of how individuals and societies allocate scarce resources among many competing uses 
• opportunity cost : the value of the oppurtunity that you give up when you choose one activity instead of another 
• as the amount of an activity increases, its marginal benefit falls and its marginal cost rises