Opportunity Cost and Thinking at the Margin

Economists are always looking at the impact a decision has on all surrounding options. The term opportunity cost is simply a way of looking at what is being sacrificed in the decision making process. To put it plainly, when something is chosen, then something is refused. The item or service that is forgone is the opportunity cost. To apply this concept we will need to use some examples.

When you enter a fast food restaurant, you are presented with a variety of options. Since you are hungry you choose to order food. On the menu are Tacos, Burritos, Nachos, and Sodas. You only have enough money for three items. Since you do not enjoy the aroma of cheese you avoid the nachos; and since you know that you'll be thirsty you choose the soda. So you order one taco, one burrito, and one soda. You had the opportunity to order nachos but you could not afford the cost. The nachos then become the opportunity cost.

Opportunity cost is found in decisions everyday. Let us say that you have three options to get to school. You can walk, ride a bicycle, or ride a bus. If you were to prioritize these options first to third, then the second most desirable option is the opportunity cost. You need to get to school on time so walking is third. It is a little chilly outside so the bicycle option is second. Thus, your first option is to take the bus. By taking the bus your refused the second option - the bicycle. In this scenario, the opportunity cost is the bicycle.

If we were to add several more options to our scenarios above, we could then apply the concept of thinking at the margin. If the fast food restaurant had small, medium, large, and extra large varieties on all food and drinks, then you may consider decreasing or increasing one size option so as to similarly increase or decrease the size of another option. Thinking at the margin occurs when a choice is slightly modified by a factor of one to affect a change on the other possible options. If your boss sent you home one hour early to avoid paying you additional money, then he or she is thinking at the margin by reducing their labor cost by one unit of time.

Factors of Production

Factors of production are the resources used to provide a service or good to market. Typically, speaking these three factors are land, labor, and capital. Without the factors of production it is not possible for an entrepreneur, also know as a businessperson, to complete business related activities. All businesses need the factors of production.

Land is the first factor of production. To make a successful business it is required that land is secured for several reasons. First, land is needed to locate your business operations. More importantly, land is needed to develop natural resources. It is impossible for the farmer to grow apples without land; whereas it is similarly impossible for the barber to service his or her customers without a shop. Land is the first necessity required to satisfy the factors for production.

Labor is work. All business ventures require some type of labor to produce goods or services. To define labor in other words, it is the effort put forth by a worker for which that employee gets paid. For example, the farmer works his fields to produce an increased yield of apples. The barber uses his or her effort to cut the customers' hair. All effort used to produce goods or services is called labor.

Businesses require the use of capital. Most often the term capital relates to money for investment, but in the pure economics sense, capital is also the machinery used to produce goods or services. Money can be used to purchase items to streamline business operations. Furthermore, machinery already owned is valuable and similarly considered capital. The farmer needs money capital to buy seeds and the farmer needs machinery capital to plow the fields. Both examples used here are capital.

There are two types of capital used in an economic system. First, economists use the term physical capital to describe machines or other objects created by humans to increase production. On the other hand, economists will refer to another type of capital called human capital. Human resources are an integral part of the economic system. Some humans are inexperienced while others have extensive educational backgrounds. Entrepreneurs have to make economic decisions about their labor force and consider the value of their human capital. To put it simply, human capital describes the levels of experience, education, intuition, and et cetera in relation to a given labor force. Typically speaking, the more valuable you are as human capital, the more money you are paid.

Introduction to Economics

People make decisions about things in their lives everyday. In its most simplistic form, these decisions, and the study of their relating trends, are the basis for the economics academic discipline. Economics seeks to develop an understanding of information relating to these decisions on many levels. Your decision to eat an apple for lunch, a corporate decision to invest billions of dollars, and a government decision to reduce tax costs are all examples of economics. Or in other words, economics studies the decisions that are made in relation to resources in our everyday lives.

The study of economics begins with the terms scarcity and choice. Because not everything is available to everyone all of the time, we have to make decisions and prioritize our resources. Scarcity is the concept that there is a limited amount of an item that is sought after by an unlimited amount of want. To say it another way, there is a limit to how many apples you can buy, carry, and eat at lunch. Like all goods and services, apples become scarce and choices have to be made.

Goods and services are the two basic components in the economic system. Goods are tangible items that are produced, sold, transported, consumed, or saved. The apple is a good. On the other hand, there are services. Services are activities performed by others for trade. For example, an auto mechanic knows how to fix cars. You do not know how to fix cars. As a result, you trade your money for the auto mechanics service. A service is not a product or a tangible item that you purchase and possess. The service is an activity that is performed that you could not otherwise perform on your own.

By studying how goods, services, money and other factors of production operate, economists can make predictions about peoples' behavior. These predictions are utilized to make investments, decisions about pricing, changes to supply, and many other economic strategies. The most successful entrepreneurs have a solid understanding of the economics discipline.

Earliest Humans of the Western Hemisphere

Christopher Columbus may have been the first European to sail across the Atlantic Ocean to the Gulf of Mexico, but he was not the first to discover the Americas. Human migration dates back to nearly 200,000 years ago. At approximately 15,000 years ago Humans crossed a land bridge called Beringia from Asia to Alaska. As a result, human migration and settlement occurred across both North America and South America 1,000's of years before the Nina, the Pinta, and the Santa Maria landed at Hispaniola in the Gulf of Mexico (Columbus). Humans chased game across the exposed land that is today's Bering Strait. Because the Earth was much cooler 15,000 years ago, an increased amount of seawater was frozen into the polar ice caps. The consequence was that areas of land were exposed that today are under water.

The first humans chased wild game across Beringia for survival. Eventually these humans migrated into the lower latitudes of Canada and into the present day United States. After several millennia, these humans had crossed Panama and spread across the South American continent. By the time of European contact humans had spread across all corners of the western hemisphere. Early on these humans were labeled "Indians," but today we refer to peoples with this ancestry as Native Americans.

Native Americans, as mentioned above, existed all across the Americas. In Canada and the United States there were hundreds, possibly thousands of differing tribes. These Native Americans carved out different ecological niches to survive. For example, some Native Americas relied on hunting buffalo across the plains; whereas others used agricultural techniques to sow corn. In addition, Native Americans that settled in present-day Mexico and the Andes Mountains of South America built cities that rivaled European cities. One example is the Aztec capital city of Tenochtitlan. The Inca, Maya, Pueblo, Kiowa, Iroquois, Cherokee, Pawnee, Yokut, Seminole, Eskimo, and many other tribes already inhabited the Americas for thousands of years prior to the voyage of Christopher Columbus.

Introduction to United States Geography

The events which have shaped the history of the United States were often times affected by the geography of this nation. Both political and physical regions of the United States had an impact on eras such as the Revolutionary War, the Civil War, the Mexican-American War, the Indian Wars, the Spanish-American War, the Old West, and other notable historical time periods. Prior to studying the historical events surrounding the United States it is important to develop an understanding of basic geographical locations. 

1. California        26. Kentucky

2. Oregon           27. Illinois

3. Washington    28. Wisconsin

4. Idaho              29. Michigan

5. Nevada          30. Ohio

6. Arizona          31. Indiana

7. Utah               32. West Virginia

8. Montana         33. Pennsylvania

9. Wyoming        34. New York

10. Colorado      35. Vermont

11.New Mexico  36. New Hampshire

12. Texas           37. Maine

13. Oklahoma     38. Massachusetts

14. Kansas         39. Rhode Island

15. Nebraska      40. Connecticut

16. South Dakota     41. New Jersey 

17. North Dakota     42. Delaware

18. Minnesota          43. Maryland

19. Iowa                   44. Virginia

20. Missouri             45. North Carolina

21. Arkansas           46. South Carolina

22. Louisiana           47. Georgia

23. Mississippi        48. Florida

24. Alabama            49. Alaska

25. Tennessee         50. Hawaii

White - Regions

1. San Joaquin Valley

2. Great Basin

3. Great Plains

4. Coastal Plains

Red - Mountains

1. Coastal Range

2. Sierra Nevada

3. Cascades

4. Rocky

5. Appalachian

Yellow - Bodies of H20

1. San Francisco Bay

2. Lake Tahoe

3. Great Salt Lake

4. Lake Superior

5. Lake Michigan

6. Lake Huron

7. Lake Erie

8. Lake Ontario

9. Chesapeake Bay

10. Gulf of Mexico

Turquoise - Rivers

1. Mississippi

2. Ohio

3. Missouri

4. Colorado

Judicial Branch

The Judicial Branch of the United States Government is responsible for comparing congressional and state legislation to the United States Constitution. All laws in the United States must fall within the limits set by the Constitution. If legislation is held to violate a constitutional right, then the legislation is struck down as unconstitutional. The Supreme Court is the highest judicial authority in the United States. As a result, issues which make the Supreme Court are usually landmark and historical in nature. Many decisions by the Supreme Court affect everyday lives of Americans.

The Supreme Court consists of 9 justices. Each justice is appointed to the Supreme Court by the President. Supreme Court Justices are tenured for life once their appointment has been affirmed. Decisions made by the Supreme Court can be unanimous or as close as a 5-4 split. Once the Supreme Court is finished weighing legal issues it then gives its decision. Often times there are opinions written by the justices on both sides of the issue.

Justices of the Supreme Court 2012

The Supreme Court is designed to interpret the legal intentions of the framers of the Constitution. When issues arise that are unclear within the written legalities of Constitution, the Supreme Court will agree to hear arguments prior to making its decision. Once the decision has been made a legal precedent has been set. A legal precedent is a decision that can be referred to in future legal disputes. Once a precedent has been set, most often courts will adhere to the rationale of the precedent. Occasionally, a legal precedent, such as "separate but equal," will be overturned.

See the post titled "Example Landmark Supreme Court Cases."

Executive Branch

The Executive Branch of the United States Government is tasked with enforcing federal law. This branch is led by a president, who is elected by citizens of the United States. The president is supported by a vice president, cabinet members, and other heads of departments. All departments, such as the Department of State, Department of Justice (F.B.I.), Department of Homeland Security, Department of Education, and et cetera are all subject to the authority of the President of the United States. These departments help the president enforce all federal law passed by congress.

The President of the United States is elected every four years. Presidents are only allowed to serve two terms for a total of 8 years. If a vice president assumes the presidency more than half way through a term, then he or she is eligible for a total of 10 years. Presidents must be natural born citizens in the United States. Furthermore, presidents must be a minimum of 35 years of age. Finally, presidents must have been a resident in the United States for at least the past 14 years.

Current President of the United States Barack Obama

The President of the United States is given certain powers to enforce law. Although, Congress is given the right to declare war, the President is the commander-in-chief of all military agencies. As commander-in-chief of the military, the President wields enormous power. For example, the President is in command of the Central Intelligence Agency, the Federal Bureau of Investigation, The United States Navy, Army, Air Force, Coast Guard, and Marine Corps, and many other organizations. With the advent of the National Security clause, the President may command any of his supporting departments to engage in any activity, even if the activity is forbidden by law (Special operations of a clandestine nature is an example of how the President uses the National Security clause to surpass legal restrictions). The President is also given the authority to make appointments to positions such as the Supreme Court and other departments. As a result, the President is often referred to as the most powerful human on Earth. In one sense this accurate; but when considering that the peoples' representatives in congress have the power to impeach the president, one must not forget that the office of the presidency belongs to the people and that he or she is your public employee.