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what is economics
Title: what is economics
Category: Law & Government / Government & Politics
Details: Words: 329 | Pages: 1.4 (approximately 235 words/page)
what is economics
Economics: the study of how people choose to use their limited/scarce resources to satisfy their unlimited wants
Economic choices incur economic costs (called opportunity costs)
Opportunity cost: value of the best alternative forgone
[NB: note OC is the BEST alternative forgone and NOT ALL alternatives]
e.g. Explain which of the following are part of your OC of being a student.
1) the money you spend on haircuts
2) the holiday you would have taken if …showed first 75 words of 329 total…
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…showed last 75 words of 329 total…What is his OC for the incident?
OC= Out-of-pocket loss + R5 000
Match fee loss + R10 000 2 matches
Appearance fee loss + R20 000 2 matches
BUT insurance fee gain R1 000 2 matches
Total R63 000
Therefore in our world there are three unsolvable problems:
1. Scarcity
2. Choice
3. Opportunity costs
What are the remaining solvable economic problems:
1. Allocation function (WHAT to produce and WHAT quantities? i.e. output)
2. Production function (HOW to produce? i.e. input)
3. Distribution function (FOR WHOM to produce?)
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