1. Economics is the study of __ and 2. What is opportunity cost? 3. Scarcity is the tension between __ and 4. What did Dwight Eisenhower explain as the opportunity cost of the nuclear buildup due to scarcity? 5. Government officials use economic theory to guide __ . 6. Incentives are a set of external (rather than intrinsic) __ that explain people's choices. a. What's your current incentive for watching this video and filling out this worksheet? 7. What is the difference between macroeconomics and microeconomics? a. What would be an example of something studied in macroeconomics? b. What would be one example of

##Step 1: Defining Economics<br />###Economics studies how society manages its scarce resources. This involves choices about production, distribution, and consumption of goods and services.<br />##Step 2: Defining Opportunity Cost<br />###Opportunity cost is the value of the next best alternative forgone when making a decision. It represents the benefits an individual, investor, or business misses out on when choosing one option over another.<br />##Step 3: Defining Scarcity<br />###Scarcity is the fundamental economic problem where unlimited human wants and needs meet limited resources. This creates tension between our desires and the availability of resources to fulfill them.<br />##Step 4: Eisenhower's Explanation of Opportunity Cost<br />###Dwight Eisenhower explained that the opportunity cost of the nuclear arms race was the potential for advancements in other areas like education, healthcare, and infrastructure. The vast resources allocated to nuclear weapons could have been used to improve society in other ways.<br />##Step 5: Government Use of Economic Theory<br />###Government officials use economic theory to guide public policy. They apply economic principles to design and implement policies aimed at achieving specific economic goals, such as promoting growth, stability, and equity.<br />##Step 6: Defining Incentives<br />###Incentives are external motivators that influence people's choices and actions. They can be positive (rewards) or negative (penalties) and play a crucial role in shaping economic behavior.<br />###Your current incentive for watching the video and filling out the worksheet is likely to gain knowledge, complete an assignment, or receive a grade.<br />##Step 7: Differentiating Macro and Microeconomics<br />###Macroeconomics studies the economy as a whole, focusing on aggregate variables like GDP, inflation, and unemployment. Microeconomics, on the other hand, examines the behavior of individual economic agents, such as households and firms, and their interactions in specific markets.<br />###An example of a macroeconomic topic is the study of national inflation rates.<br />###An example of a microeconomic topic is the analysis of consumer demand for a particular product.<br /><br /><br />#