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Hello, everyone.
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In this video, we will match some definitions with economic terms.
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So the first one the next best thing that must be foregone in order to produce one more unit of a given product.
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What's important about this phrase is the phrase next best thing.
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Intuitively, it means what was the next best outcome you could have done with the with the resources you spend and this is called opportunity cost.
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For example, let us say i chose to spend two hours drawing to produce a picture.
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However, the next best thing i could have spent the two hours instead was to go to work and get paid two hours worth of wages.
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Thus, my opportunity costs of drawing that picture was x amount of dollars onto the second definition the pleasure, happiness or satisfaction obtained from consuming a good or service.
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So in economics, we call this utility oops, so utility is not a specific unit of measure such as meter or pounds, but it is instead a general term to compare value in term of in terms of happiness.
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For example, if i were to drink a bottle of water while i'm thirsty, i would gain more utility, more pleasure or happiness than if i were if i were to drink while not thirsty now to the third one, the social science concerned with how individuals, institutions and society make optimal or best choices under conditions of scarcity...