article.gif (1381 bytes)Form 4 Economics note on Chapter 1

After studying chapter 1, you MUST be able to

Sides2.gif (1895 bytes)define scarcity

Sides2.gif (1895 bytes) define opportunity cost

Sides2.gif (1895 bytes) state how cost will change

Sides2.gif (1895 bytes) distinguish between free goods and economic goods

Sides2.gif (1895 bytes) decide whether a good is a free good or not and state the reason

Sides2.gif (1895 bytes) distinguish between consumer goods and producer goods

Sides2.gif (1895 bytes) distinguish between a real flow and a money flow

Q1. Does the cost change?
Yes, there is an increase ( a decrease ) in the value of the highest - valued option forgone, so the opportunity cost will increase ( decrease )
Or
No, there is no change in the highest - valued option forgone, so the cost will not change.
Q2. Is good X is a free good?
Yes, the quantity available of good X is sufficient to satisfy all human wants for it.
or
No, the production of good X requires the use of scarce resources which have alternative uses. The quantity available of good X is insufficient to satisfy all human wants for it.

 

 

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