Unlimited wants unlimited desire for goods and services

1
Wants
Unlimited wants unlimited desire for goods and
services
Why unlimited wants? Reasons
(a) prefer more goods and services
(b) always have new wants
2
Resources
Need resources to satisfy wants
Kinds of resources
(a) natural resources e.g.
Resources are limited.
(b) human resources e.g.
(c) man-made resources e.g.
3
Scarcity
resources are relatively scarce to satisfy all
human wants
All people, organizations and countries have to
face scarcity.
4
Scarcity
Does scarcity exist in each of the following
cases?
(a) unlimited wants gt limited resources __
(b) unlimited wants unlimited resources __
(c) limited wants lt limited resources __
(d) limited wants gt limited resources __
Need to compare wants and resources. ? Scarcity
is a _______________concept.
5
Choice
Scarcity unlimited wants gt limited resources
Cannot satisfy all human wants.
How to make the best use of the limited
resources?
Choose the most urgent want and satisfy it first.
? Scarcity ---gt choice
6
Opportunity Cost
Aim
For decision-making (make the best choice).
Choice Option
7
Opportunity Cost
E.g. 1 Two options only
Reason value of concert ticket gt value of
handbag
300 only Order of ranking Concert ticket
(300) Handbag (300)
What does Mary have to give up (forgo) if she
chooses the concert ticket?
Forgo 300 or the handbag or 300 and the handbag?
Answer
8
Opportunity Cost
E.g. 1 Two options only ?The opportunity cost of
choosing the concert ticket is to forgo the
handbag.
9
Opportunity Cost
E.g. 2 Two options only
300 only Order of ranking Concert ticket
(300) Handbag (300)
Reason value of concert ticket gt value of
handbag
What does Mary have to give up (forgo) if she
chooses the handbag?
Answer
10
Opportunity Cost
E.g. 2 Two options only ?The opportunity cost of
choosing the handbag is to forgo the concert
ticket .
11
Opportunity Cost
E.g. 3 Three options
Reason value of concert ticket gt value of
handbag gt value of magazine
300 only Order of ranking Concert ticket
300) Handbag (300) Magazine (300)
What is Marys opportunity cost of choosing the
concert ticket?
Answer
12
Opportunity Cost
E.g. 3 Three options
Chosen option
300 only Order of ranking Concert ticket
(300) Handbag (300) Magazine (300)
Highest-valued option
13
Opportunity Cost
Definition Opportunity cost is expressed in
terms of the ____________________________ _______
__________________________.
14
Opportunity Cost
E.g. 4 Three options
300 only Order of ranking Concert ticket
(300) Magazine (300) Handbag (300)
Value of the chosen option
Highest-valued option
The opportunity cost of choosing the concert
ticket has _________ from forgoing the handbag to
magazine.
15
Opportunity Cost
E.g. 5 Three options
300 only Order of ranking Concert ticket
(300) Handbag (300) Magazine (300)
Value of the chosen option
Highest-valued option
Suppose the concert is not as good as Mary thinks
before. How is her opportunity cost of choosing
the concert ticket affected?
Answer
16
Opportunity Cost
Conclusion
A change in the _______of the option chosen
will ______ affect the opportunity cost.
17
Opportunity Cost
E.g. 6 Three options
Value of the chosen option
300 only Order of ranking Concert ticket
(300) Handbag (300) Magazine (300)
Value of the highest-valued option
Suppose the handbag is not as good as she thinks
before. How is your opportunity cost of choosing
the concert ticket affected?
Answer
18
Opportunity Cost
Opportunity cost changes only if the
highest-valued option forgone_____________.
19
Opportunity Cost
E.g. 7 Three options
Reason value of concert ticket gt value of
handbag gt value of magazine
300 only Order of ranking Concert ticket
300) Handbag (300) Magazine (300)
What is Marys opportunity cost of choosing the
handbag?
Answer
20
Opportunity Cost
E.g. 8 Three options
It takes 1 hour to buy the concert ticket and
Mary can earn 100 in an hour as a tutor
300 only Order of ranking Concert ticket
(300) Handbag (300) Magazine (300)
What is her opportunity cost of choosing the
concert ticket?
Answer