What is scarcity?
Scarcity is the idea that humans have unlimited wants but limited resources. This is the fundamental economic problem that must be solved by allocating resources in the most efficient manner: gaining the most satisfaction from the resources available.
What are the different types of unemployment?
The three main types of unemployment are structural, frictional, and cyclical. Structural unemployment occurs when there is a lack of demand for a certain employee. For example, elevator operators are no longer demanded due to the increase in elevator technology. Frictional unemployment is the turnover time for a person to find a job. Once a person graduates college, the time spent before they start their career is frictional unemployment. Also, if a person decides to quit their job to find a new one, the time in-between would be classified as frictional unemployment. Cyclical unemployment is a direct result of economic recessions. Typically when the economy is in a recession, many jobs are lost. The people who become unemployed as a result of a recession are cyclically unemployed.
What is the law of diminishing marginal utility?
The law of diminishing marginal utility states that with each additional unit of consumption, marginal satisfaction decreases. For example, if you have your favorite meal for dinner tonight, you will gain satisfaction from it. If you have the same meal again for dinner tomorrow, you will gain less satisfaction. If you have it a third night, you will gain even less satisfaction. This loss in utility is the basis of the law of diminishing marginal utility.