The Economic Principles

Imagine that you have decided to open a small ice cream stand on campus called "Ice-Campusades." You are very excited because you love ice cream (delicious!) and this is a fun way for you to apply your business and economics skills! Here is the first month's scenario--you order the same number (and the same variety) of ice creams each day from the ice cream suppliers, and your ice creams are always marked at $1.50 each. However, you notice that there are days when ice creams remain unsold but other days when there are not enough ice creams for the number of customers.

Opportunity cost means giving up something of value or importance to you to achieve a particular goal or outcome. It is a chance that causes you to miss out on something you want, but an individual can benefit by gaining something for the opportunity they accepted.

A corporate business enterprise is established under a specific legal framework where laws governing the operations and functioning of the enterprise are outlined. The activities of the enterprise are monitored and therefore such an enterprise is recognized by law. This is important due to the fact that legal suits can be filed by the enterprise within the provisions of the law.

For each choice I make, there is an opportunity cost. Opportunity cost is the real cost of an item, what I must give up in order to

1. Describe two examples of important things that financial planning skills can help you do, and explain why these things are important to you personally. (4-6 sentences. 2.0 points)

7. Opportunity costs refer to time, money, and other resources that are given up when a decision is made.  TRUE

Economics is the social science that deals with the production, distribution, and consumption of goods and services and with the theory and management of economies or economic systems. All economists agree on one thing, the economy is large and it is unpredictable. However, throughout the years economists have developed some simple but widely applicable principles that are useful when trying to understand decisions that are made by everyday people to the workings of highly complex markets. There are Seven Core Principles of Economics. These principles are: Scarcity Principle, Cost-Benefit Principle, Principle of Unequal Costs, Principle of Comparative Advantage, Principle of Increasing Opportunity Cost, Equilibrium Principle, and

1. (10 pts.) Stella Ann Freeman is having a difficult time deciding whether or not to purchase a new car. How would understanding the concept of opportunity costs help her make a decision?

There can never be any country in the world which can survive on its own without being involved in international trade with other countries. Even the United States a super power can not have an economy which is growing or even raise the wages of our citizens unless we extend our trade beyond our borders and sell products and at the same time buy products from the rest of the population outside our country. We import a lot of goods from other countries. There are instances whereby there can be surplus in the goods that are imported in the United States. For instance the United States is a huge importer of automobiles. A surplus in the imported automobiles can have certain consequences on businesses as well as consumers. This will lead to a price drop of the automobiles. This is good news to the consumers as they will purchase them at lower prices. On the other hand this is bad news to the businesses since the price drop will make them incur a lot of losses.

2. The cost of something is what you give up to get it. - It means comparing cost and benefits of alternatives. When people choose one thing, they give up something else -> opportunity

For example, when a good is scarce, the prices goes up, so consumers try to avoid buying and therefore conserving the resource. Then, the suppliers want to find more of the source as to get a better profit. The reasons behind their actions are selfish, yet they benefit all of society. Smith identified that the pursuit of profit and the power of self-interest would increase motivation and result in more advances in technology. His model of capitalism was on the basis of freedom and selfishness as a motivator for society. It was also on the basis that the economy would go through recessions and expansions but fix itself. Recessions are periods in the economy in which unemployment goes up, while profits and spending goes down; a slowdown of the economy. An expansion is essentially the exact opposite. The classical model of economics states that the economy will continue to go through these fluctuations over time and will fix itself with no help, thus not needing a government to give influence.

Three economic stances a government may have are neutral, expansionary, and contractionary. A neutral stance indicates a balanced economy. In most cases this stance leads to more tax revenue for the government. Expansionary implies that the government is spending or allocating more money than it collect. Contractionary implies that the government is collecting more money than it spends of allocates.

-The opportunity cost of something is what you must give up of one thing, in order to get it. Opportunity cost is a key concept of economics because it is described as expressing the basic relationship between scarcity and choice. Opportunity cost plays a crucial part in ensuring that scarce resources are used efficiently.

This research topic is significant to the current property market in Singapore and its sudden increased demand for houses despite the economic downturn, exploring deeper as to whether the government policies were the real influential causes to this boom in property demand. It has relevance to the economic concepts of demand and supply, elasticity, inflation and monopolistic competition. This topic is worthy of investigation because it is a hot media topic in Singapore, and is widely debated in the country because it’s the most expensive household asset.[2]

Parts of opportunity cost are explicit costly (money spent along the project to make it happen, for the task to be done perfectly money and labor need to be involved, e.g. Boss paid workers for their project, students pay tuition to enroll in class and all other amenities involved.) and implicit cost (one’s time value or origin in the next best alternative. The time incorporated in order to run out the next best option).