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Category: Business and Industry
Date Submitted: 11/16/2015 08:24 PM
Read Chapter 1 of the text.
View the PowerPoint Presentation on Chapter 1.
Read the following web lecture 1 (You should read the text first to understand the
web lecture).
Exercises below are not assignments, but for your own practice
WEB LECTURE 1
1. Scarcity, Choice, Benefit and Cost (opportunity cost)
Scarcity and choice are the two essential ingredients of an economic topic. Goods are
scarce because desire for them far outstrips their availability in nature. Scarce goods are
called economic goods. Scarcity forces us to choose among available
alternatives. Scarcity and poverty are not the same thing. Absence of poverty implies
some basic level of need has been met. An absence of scarcity would imply that all of our
desires for goods are fully satisfied. We may someday eliminate poverty, but scarcity
will always be with us.
Every society must have a method to ration the scarce resources among competing uses.
Various factors can be used to ration (first-come, first-served). In a market setting, price
is used to ration goods and resources. When price is used, the good or resource is
allocated to those willing to give up “other things” in order to obtain ownership
rights. Competition is a natural outgrowth of the need to ration scarce goods. Changing
the rationing method used will change the form of competition, but it will not eliminate
competitive tactics.
Lesson about making choice (decision) is summarized in the adage: “There is no such
thing as a free lunch.” To get one thing that we like, we usually have to give up another
thing that we like. Making choices requires trading off one goal against another.
Because people face tradeoffs, making decisions (choices) requires comparing the costs
and benefits of alternative courses of action. In many cases, however, the cost of some
action is not as obvious as it might first appear. This cost is called the opportunity cost,
whatever that must be given up to obtain some item.
Many...