Economic Concepts Worksheet
University of Phoenix
Economic Concepts Worksheet
| Application of Concept from Personal Experience
| Reference to Concept in Reading
| Scarcity, Trade-offs, Opportunity Cost (p. 3-4, 12) * Scarcity involves resources with limitations; no matter how much money or trade is offered in exchange for resource, there is a demand that will always be greater than the quantities available. * Trade-off involves the final cost for a resource based upon the person or entity giving something or many things up in return for the desired good. * Opportunity cost involves the estimation of the final cost of a resource as it is gauged against the value of the alternative or next-best scenario.
| Scarcity in Action: Yesterday I went to the market and was going to buy a pint of blueberries to put on waffles the next morning for breakfast. The cost of the pint of berries was $7.99 when during the summer, the same pint of berries were 2-for-$5.00. Even though the berries were much more expensive, I was willing to pay more because berries are not as prolific in the winter.Trade-off in Action: In the aforementioned example, there was also a trade-off involved in the acquisition of my berries. I was feeling the financial pain as I reached in and paid the money for the privilege of eating a fresh berry during the winter.Opportunity cost in Action: Again, using the example in scarcity, I can apply opportunity cost in my going to the freezer section of the supermarket and getting weighing the product cost of the berries: the cost of the frozen bag (2 pints) was less than half of the market price for fresh berries. This alternative is a part of the decision-making process.
| "Scare resources: The limited quantities of land, capital, labor, and entrepreneurial ability that are never sufficient to satisfy people’s virtually unlimited economic wants" (McConnell & Brue, 2005, G-21)."Tradeoff : The sacrifice of some or all of one economic goal, good, or service to achieve some other goal, good, or service" (McConnell & Brue, 2005, G-24)."Opportunity cost: The amount of other products that must be forgone or sacrificed to produce a unit of a product" (McConnell & Brue, 2005, G-17).
| Production Possibilities Curve (p. 11-12, 15-18) * Production possibility involves an economies output of goods or resources and all of the various combinations; the curve chart will essentially guide the decision based upon the production outputs at various levels and inputs/outputs.
| Production Possibilities Curve in Action: In this scenario, I have just purchased a small office space on Main Street and I am considering either opening a coffee shop, or tea house. I could weigh several production possibilities: coffee beans versus tea leaves; donuts versus bagels; coffee cake versus cinnamon rolls. Also, I would need to consider the radius of other coffee or tea houses, the area demographics, the economy of the location. These are all things I can do using a production possibility curve.
| "Production possibilities curve: A curve showing the different combinations of two goods or services that can be produced in a full-employment, full-production economy where the available supplies of resources and technology are fixed" (McConnell & Brue, 2005, G-19).
| Comparative Advantage, Absolute Advantage, Specialization and Trade Balance (p. 90-92, 678-680). * Comparative advantage occurs when one economy has an advantage over another because it is able to generate a particular resource where another economy cannot. * Absolute advantage occurs when an economy can produce a particular resource with fewer inputs and or more efficiently. * Specialization focuses on an economy's resource for knowledge, skill, or ability in such a way as to improve productivity and increase the market economy. * Trade balance or "net export" occurs when there is a parallel increase of Gross Domestic Products (GDP)...
References: Hoagland, S. (2008). International Trade Economics. Great Neck Publishing. Retrieved from Research Starters - Business database: http://search.ebscohost.com/login.aspx?direct=true&db=e6h&AN=28544311&site=ehost-live.
McConnell, C. R., & Brue, S. L. (2005). Economics: Principles, problems and policies (16th ed.). Boston: McGraw-Hill/Irwin.
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