A resource is scarce when there isn’t enough to satisfy all of our wants.

safe! Is it possible to be too safe?! Yes, because trade-offs are everywhere. Researching, developing, and testing a new drug cost time and resources. On average, it takes about 12 years and $1 billion to bring a new drug to market. More testing means that approved drugs will have fewer side effects, but there are two important trade-offs: drug lag

Elasticity rule: If two linear demand (or supply) curves run through a common point, then at any given quantity the curve that is flatter is more elastic.

What happens to seller revenues when the demand curve is inelastic and the price rises? (Review Figure 5.3 if you don’t know immediately.) When the demand curve is inelastic, an increase in price increases seller revenues. In Figure 5.5, the blue rectangle is seller revenues at the no prohibition price; the much larger green rectangle is seller rev

Total consumer surplus Total consumer surplus is measured by the area beneath the demand curve and above the price.

For example, an increase in the quantity demanded is a movement along a fixed demand curve. An increase in demand is a shift of the entire demand curve (up and to the right).

A deadweight loss is the reduction in total surplus caused by a market distortion or inefficiency.

You can die because an unsafe drug is approved—you can also die because a safe drug has not yet been approved. This is drug lag.

Oil, however, is not equally valuable in all of its uses. Oil is more valuable for producing gasoline and jet fuel than it is for producing heating or rubber duckies. Oil is very valuable for transportation because in that use oil has few substitutes.