Economics is a social science that examines how people choose among the alternatives available to them.

Scarcity implies that we must give up one alternative in selecting another. A good that is not scarce is a free good.

The three fundamental economic questions are: What should be produced? How should goods and services be produced? For whom should goods and services be produced?

Every choice has an opportunity cost and opportunity costs affect the choices

people make. The opportunity cost of any choice is the value of the best alternative that had to be forgone in making that choice.

Economists focus on the opportunity costs of choices, they assume that individuals make choices in a way that maximizes the value of an objective defined in terms of their own self-interest, and they assume that individuals make those choices at the margin.

Economics is divided into two broad areas: microeconomics and macroeconomics.

Economists try to employ the scientific method in their research.

Scientists cannot prove a hypothesis to be true; they can only fail to prove it false.

Economists, like other social scientists and scientists, use models to assist them in their analyses.

Two problems inherent in tests of hypotheses in economics are the all-other-things-unchanged problem and the fallacy of false cause.

Positive statements are factual and can be tested. Normative statements are value judgments that cannot be tested. Many of the disagreements among economists stem from differences in values.

Tregarthen, Timothy, , and Libby Rittenberg. Principles of Economics. 1969 . Flat World Knowledge. 16 Oct, 2009. .