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Title: Scarcity & Opportunity Cost
Description: Breakdown of the components of scarcity and opportunity cost.
Description: Breakdown of the components of scarcity and opportunity cost.
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Homework 1: Scarcity and Opportunity Cost
Read Chapter 1 (pages 2 to 5) in your Peter Smith OCR Economics Textbook
...
Opportunity Cost With:
Your Choice
What did you forgo?
Money
Buying a magazine
A chocolate bar
Time
Going to the cinema
Going bowling
3) With which of Samuelson's three questions (what, how, for whom) would you associate the
following?
Statement
What, How, For Whom?
Faced with increased labour costs, a firm introduces labour-saving How
machinery
A firm chooses to switch from producing CD player in order to What
increase output of DVD recorders
...
The factors of production are Land, Labour, Capital and Enterprise
...
Factor of
Production
Explanation
Example in
Farming Context
Reward
Land
Natural resources available for production on
or below the land
Fields with crops
Rent
Labour
The human input into the production process
Ploughing fields
A wage
Capital
Goods used in the supply of other products
Tractors
Interest
The farmer
Profit
Enterprise Entrepreneurs organise factors of production
and take risks
5) Classify each of the following resources as human, natural (renewable or nonrenewable) or
produced:
Resource
Human, natural (renewable or nonrenewable) or produced?
Timber
Natural
Services of a window cleaner
Human
Natural gas
Natural
Solar energy
Natural
A combine harvester
Produced
A computer
Produced
A computer programmer
Human
6) Define the following key terms, and give an example of each:
Key Term
Definition
Example
Durable
Goods
Goods that require infrequent replacement
Toaster
NonDurable
Good
Goods that are consumed or are only useable for a short
period of time
Fresh vegetables
Title: Scarcity & Opportunity Cost
Description: Breakdown of the components of scarcity and opportunity cost.
Description: Breakdown of the components of scarcity and opportunity cost.