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Managerial Economics (7th Edition) Edit edition This problem has been solved: …
Scarcity : Scarcity is simply a situation where resources are limited and wants are unlimited. It can be defined as a condition in which human wants exceed the available resources necessary to cater to those demands. It means demand is more than the supply, or people want more than is available. As, scarce resources have alternative uses, choice becomes unavoidable. Because of the scarcity of economic resources consumers, producers and government must make choices. Choices must be made regarding the use of these scarce resources in the production, distribution and consumption of goods and services. To make a choice, simply means to trade-off one choice with other.
Therefore, Scarcity is a cause of economic problems. Various economic decisions have to be made to allocate the insufficient productive resources efficiently to cater to the unlimited human wants.
Opportunity Cost : Opportunity is the outcome of scarcity. An opportunity cost is the value of the second best alternative that is forgone when a choice is made. In other words, opportunity cost can be defined as the benefits that could have been received if other alternative choice was made.
As there are alternative uses of scarce economic resources, need arises to select the best way to use these resources (say land, labour and capital). When one alternative is chosen over other, the next best alternative which is forgone is called opportunity cost of making a choice, because we give up the opportunity to have other desirable things.
The concepts of scarcity and opportunity cost play a very important role in managerial decision making. Scarcity and opportunity cost are interlinking concepts. Scarcity is the root cause of all economic problems therefore it is central to all economic decisions. Its importance in managerial decision making lies in taking decisions regarding allocation of scarce resources. For example, if a company is in the business of beverages and food. And it has an expansion plan. There are limited resources of capital and labour which can be employed in either of the businesses. As resources are scarce, if the company allocate more resources to beverage business, it will have fewer resources for food business. Therefore, the company need to make a choice and decisions regarding allocation of these scarce resources among the two businesses. This involves trade off among the two choices. If the company makes the choice and decides to allocate resources in beverage business, it will forgo the food business, which will the opportunity cost of the choice the business has made. Or, this trade off is the forgone next best option which represents the opportunity cost.
The opportunity cost of the value of opportunity lost is taken into consideration when alternatives are compared. It measures the benefit of opportunity forgone.
Therefore, both the concept of scarcity and opportunity cost are helpful in managerial economics in evaluating the various alternatives available when scarce economic resources are employed for various uses.
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Week 7 Assignment
Applied macroeconomics. (econ 101), montclair state university, recommended for you, students also viewed.
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Week 7 assignment (15 points), question answer, how has improved resource allocation stimulated economic growth.
(3 Points )
Resource allocation is to put resources to use where they can achieve the most production. In producing at the best rate, there will be stimulated economic growth. If resource allocation is improved then so will the production and distribution of products which in turn will generate more profits and stimulate the economy.
The achievement of full employment is a sufficient condition for the
Achievement of economic growth. evaluate .( 3 points).
Economic growth can be achieved without the achievement of full employment, but a lower rate of unemployment will lead to a higher rate of economic growth. With more people employed, there will be more production and more jobs to open more production facilities, which will create more product and sales, generating a boom in the economy because of the growth.
Assume that an economy has 2000 workers, each working 3000
Hours per year. the average real output per worker-hour is $10., what will the total output or real gdp be explain .(2 points).
The total output would be 60 million because you multiply the number of workers by the number of work hours and then you multiply that number by the 10 made an hour.
How does investment in capital goods and infrastructure contribute
To economic growth (3 points).
Investing in capital goods would increase the production of goods, which would boost the economy, and the investment in infrastructure would contribute to expansion of employment and production which would also contribute to economic growth.
Prior to the Great Recession, an economic boom increased the
Worldwide production capacity. discuss how this event may have, contributed to a slow-down in productivity growth since the, great recession. (4 points).
Because there was a significant boom and then a recession, growing from this is difficult economically because so much damage was done after so much progress was made. Since a high and a low were reached, there was a slow down in growth because recovery time had to be factored in moving forward.
- Multiple Choice
Course : Applied Macroeconomics. (ECON 101)
University : montclair state university.
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Unlike static PDF Principles of Economics 7th Edition solution manuals or printed answer keys, our experts show you how to solve each problem step-by-step. No need to wait for office hours or assignments to be graded to find out where you took a wrong turn.
Week 7 Assignment - Macroeconomics Case Study Instructions In this exercise, you will demonstrate your ability to find macroeconomic data from public sources and to display it in an Excel spreadsheet. Start by choosing one of these three macroeconomic variables: Real GDP, the unemployment rate, or the inflation rate.
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To boost output before the next election, the government announces an unexpected stimulus package that you expect will increase output to 5% above potential. a) Use the Phillips curve above to estimate unexpected inflation after the stimulus. At an output gap of 5%, unexpected inflation is 1%.
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Week 7 Assignment (15 Points) Question Answer How has improved resource allocation stimulated economic growth? (3 Points) Resource allocation is to put resources to use where they can achieve the most production. In producing at the best rate, there will be stimulated economic growth.
Problem Set 10 Solutions (PDF) This section contains the problem sets and solutions for the course.
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