The nature of economic activity, The problem of choice and opportunity cost

1. Economic activity refers to the production, distribution, and consumption of goods and services in an economy.
2. The problem of choice arises because resources are limited while human wants are unlimited.
3. Opportunity cost is the cost of the next best alternative foregone when making a choice.
4. Opportunity cost is a crucial concept in economics as it helps individuals and businesses make informed decisions.
5. The opportunity cost of a decision can be measured in terms of time, money, or other resources.
6. The law of diminishing returns states that as more resources are added to a production process, the marginal benefit of each additional unit of input decreases.
7. The production possibility frontier (PPF) is a graphical representation of the maximum output that can be produced with a given set of resources.
8. The PPF illustrates the concept of opportunity cost as the trade-off between producing one good or service over another.
9. Specialization and division of labor can increase productivity and efficiency in an economy.
10. Economic growth occurs when an economy produces more goods and services over time, leading to an increase in the standard of living.