Economics: the study of how people choose to use their limited/scarce resources to satisfy their unlimited wants Economic choices incur economic costs (called opportunity costs) Opportunity cost: value of the best alternative forgone [NB: note OC is the BEST alternative forgone and NOT ALL alternatives] e.g. Explain which of the following are part of your OC of being a student. 1) the money you spend on haircuts 2) the holiday you would have taken if …showed first 75 words of 301 total…

…showed last 75 words of 301 total…is his OC for the incident? OC= Out-of-pocket loss + R5 000 Match fee loss + R10 000 2 matches Appearance fee loss + R20 000 2 matches BUT insurance fee gain R1 000 2 matches Total R63 000 Therefore in our world there are three unsolvable problems: 1. Scarcity 2. Choice 3. Opportunity costs What are the remaining solvable economic problems: 1. Allocation function (WHAT to produce and WHAT quantities? i.e. output) 2. Production function (HOW to produce? i.e. input) 3. Distribution function (FOR WHOM to produce?) ------------------------------------------------------------------------ **Bibliography**