Economics mod 1 case: Opportunity Cost
Module 1 - Background
THINKING LIKE AN ECONOMIST: THE BASIC VOCABULARY OF THE FIELD
In this module, your readings will focus on some of the major principles and themes of microeconomics. Economics can be defined as the study of the allocation of scarce resources among competing uses. In this module, you are required to read two chapters from an online text as well as review two PowerPoint presentations. These materials will help you understand some of the major concepts in Economics such as resources, opportunity cost, and scarcity.
Required Reading
Rittenberg L. and T. Tregarthen (2009). Chapter 1: Economics: The Study of Choice.Principles of Microeconomics Retrieved from: http://www(dot)web-books(dot)com/eLibrary/NC/B0/B63/TOC.html
Rittenberg L. and T. Tregarthen (2009). Chapter 2: Confronting Scarcity: Choices in Production. Principles of Microeconomics. Retrieved from: http://www(dot)web-books(dot)com/eLibrary/NC/B0/B63/TOC.html
Course Handouts
Basic Terminology in Economics
What Is Economics?
Note: All readings were validated on March 17, 2013.
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Module 1 - Case
THINKING LIKE AN ECONOMIST: THE BASIC VOCABULARY OF THE FIELD
Case Assignment
Opportunity Costs
After reading the chapters from the background materials page, please address the following questions in an essay form:
- What is the approximate dollar cost of the tuition and other fees associated with this economics course you are taking? Does this dollar cost fully reflect the opportunity cost to you of taking the course?
- In the Case in Point essay “The Rising Cost of Energy,” (section 1.1 of Chapter 1) what would be some of the things that would be included in an the opportunity cost of preserving part of northern Canada by prohibiting heavy crude oil extraction? Do you think that the increased extraction represents the best use of the land? Why or why not?
- Could a nation’s production possibilities curve shift outward? Explain what such a shift would mean, and discuss at least TWO events that might cause such a shift to occur.
- By 1993, nations in the European Union (EU) had eliminated all barriers to the flow of goods, services, labor, and capital across their borders. Even such things as consumer protection laws and the types of plugs required to plug in appliances have been standardized to ensure that there will be no barriers to trade. How do you think this elimination of trade barriers affected EU output?
Assignment Expectations
Use concepts from the modular background readings as well as any good-quality resources you can find. Please be sure to cite all sources within the text and a reference list at the end of the paper.
Length: 3 pages double-spaced and typed.
The following items will be assessed in particular:
- Your ability to apply the basic concepts and "big ideas" of economics to the relationship between money and happiness.
- Some in-text references to the modular background readings (APA formatting not required).
The essay should address each element of the assignment. Remember to support your answers with solid references including the case readings.
Economics mod 1 case: Opportunity Cost
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Opportunity cost, the value of the best alternative foregone in making any choice
What is the approximate dollar cost of the tuition and other fees associated with this economics course you are taking? Does this dollar cost fully reflect the opportunity cost to you of taking the Course?
When a person decides to make a decision between two or more alternatives there are opportunity costs involved. Essentially, one has to make decisions based on wants and needs while also taking into account the opportunity cost (Tucker, 2008). It is the cost of what is foregone for choosing a certain alternative over others. The dollar cost of this economics course relates to the total of tuition fees and other related fees and is $ 1,500. The dollar cost does not indicate the opportunity cost of taking the course. There is partial assistance in paying my school fees, and I would have gone for recreational services and spent more money with my family. Essentially, the opportunity cost will not only indicate the dollar cost of the course but also the value foregone of the best alternative. Besides other things that could have been bought using the money, the time spent in taking the course would have been rest and recreation. Essentially, there is value in undertaking the course, and the course will most likely be beneficial in the future, but presently I have to forego leisure time and income related to work that would have been done when not pursuing education. In a way it is more like ‘a saving’ reflected in the future through higher income as it is will be crucial to the partial fulfillment of the degree program requirements.
In the Case in Point essay “The Rising Cost of Energy,” (section 1.1 of Chapter 1) what would be some of the things that would be included in and the opportunity cost of preserving part of northern Canada by prohibiting heavy crude oil extraction? Do you think that the increased extraction represents the best use of the land? Why or why not
The opportunity cost related to land preservation in heavy oil producing areas of Canada includes benefits that are associated with extracting the oil. Even though, oil products are scarce, consumers would have better products among them gasoline. Thus, the consumers are likely to have a higher supply of gasoline and this might lead to a fall in the price of gasoline prices. At the same time, there is likely to be increased economic activities in the area where there is oil extraction, as this would in turn spur investment in the area and generate economic benefits for the residents of the area. Nonetheless, it is necessary to point out that policies may influence the level of investment, whether they will mostly be related to the oil industry or they will be diversification to spur more growth.
The value that people place on oil now and in the future determine the opportunity cost of preserving the extraction areas. It is economically viable to produce heavy crude from Canada, as there is likely to be a rise in the demand of oil as the world population increases. Extraction of ‘heavy crude’ is associated with pollution, and hence there is a need to invest more in the processes and extraction equipment that would help to reduce the level of toxicity. There is a choice to either produce the oil or manage the environmental damage, especially for the oil that is up to 1200 feet deep underground (Rittenberg & Tregarthen, 2009). Overall, investment should mostly be...