Economic Concepts Worksheet
Concept Application of Concept from Personal Experience Reference to Concept in Reading
Opportunity Cost –
1. The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.
2. The difference in return between a chosen investment and one that is necessarily passed up.
In my last job I worked in Sales and Marketing for SonyBMG Music. The issue that is plaguing the music industry is illegal digital downloads and bootlegging of music. The industry needed to come up with solution to continue to make the physical CD attractive. They are creating a product that is called a Connected CD that will provide a new image for the product that has matured so much. You would still be able to get a same music at different price points one would be basic and the other would be premium. The difference between the two would be the basic would be simple cover art and music and a price point between $7.50 and $9.95. The Premium would include all of the above including DVD, ringtone and a mobile wallpaper for a price of $12.50 or more. In creating these products it will create new business models via online up sell opportunities. “The amount of other products that must be forgone or sacrificed to obtain 1 unit of a specific good is called the opportunity cost”
(McConnell and Brue,2004p.24 Chapter 1)
• Full employment and productive efficiency the economy is employing all its available resources (full employment) and is producing goods and services at least cost (productive efficiency).
• Fixed resources are the available supplies of the factors of production are fixed in both quantity and quality. Nevertheless, they can be reallocated, within limits, among different uses.
• Fixed technology The state of technology—the methods used to produce output—does not change during our analysis.
• Two goods is when...