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Economic Principles

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Added on  2020-01-28

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Rachel can make only one pizza in one hour and 1 cup of coffee in 15 minutes. The opportunity cost for Monica is that she can make 3 cup of coffee in 15 minutes and two pizza in one hour as compare to Rachel. Here, as per the case study it is analysed that Monica has an absolute advantage as she can make two pizza in one hour. Here, Rachel is the one who get comparative advantage as she made the goods at lower opportunity cost than Monica.

Economic Principles

   Added on 2020-01-28

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Economic Principles
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Table of ContentsINTRODUCTION...........................................................................................................................1TASKS ............................................................................................................................................11 A. ........................................................................................................................................11 B..........................................................................................................................................21 C..........................................................................................................................................22..............................................................................................................................................23 A..........................................................................................................................................43 B..........................................................................................................................................53 C..........................................................................................................................................54..............................................................................................................................................5CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................8
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INTRODUCTIONEconomics is the study of production, distribution of the goods and services among allthe people. These principles are based on satisfying the different needs of the consumers on thebasis of limited resources (Pitt, Schaumeier and Artikis, 2012). Economics is the combination ofmicro and macro factors which influence the choices of people. The present report is based onthe case study which explains the importance of the economics. In this context, report explainsthe opportunity cost and marginal benefits. Along with this, it explains the importance of demandand supply at the workplace. Further, the difference between the shortage and scarcity isexplained in detail. TASKS 1 A. Opportunity cost is the fundamental cost of the economics through which an individualwill be able to compute their cost benefits for their particular project. This type of cost is notrecorded into the books of account but play an important role into the decision making process.In this, a person get the advantages over other alternatives so that their overall profits andbenefits can be achieved (Weyl and Fabinger, 2013). In this opportunity cost, an individual losethe gain from all other alternatives if they chose one about of them. Through this, they canmanage their resources and overall profits so that they will be able to get the benefits from theiroperations. The advantage of this kid of cost is that through this a person will be able to getaware from the lost alternatives. . Rachel can make only one pizza in one hour and 1 cup of coffee in 15 minutes. Theopportunity cost for Monica is that she can make 3 cup of coffee in 15 minutes and two pizza inone hour as compare to Rachel. Absolute advantage is the benefit that is gained by an individual as compare to otherperson in terms of cost and profits (Kaza and Knaap, 2012). Here, as per the case study it isanalysed that Monica has an absolute advantage as she can make two pizza in one hour.Comparative advantage is related to the activities that are performed by an individual in anefficient manner and at lower cost as compare to other persons. Here, Rachel is the one who getcomparative advantage as she made the goods at lower opportunity cost than Monica. 1
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