Question

1)In your own words, what do you think the study of economics is?

2)Should the government build more shelters for the homeless? Where will it get the resources to do so? What are some of the opportunity costs.

3)Markets reward individuals according to their output; communism rewards people according to their needs. How might these different systems affect work effort?

4)How does government intervention affect college admissions? Who would go to college in a completely private (market) system? Note: On average it costs about 36,000$ a year for a University to educate 1 full time student.

5)Given that the estimated cost of the War in Iraq is close to $6 Trillion dollars, what is the opportunity cost of the plan?

6)What is the opportunity cost of your favorite activity?

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Answer 1

1. The study of economics is a study of managing scarce resources in an economy to produce optimal level of output and how the output needs to be distributed among people. Economics studies individual behaviour of consumer, firm or other economic agents as well as aggregate behaviour of these agents in an economy.

Economics also studies the determination of market price of goods and services, and the input prices. The study of economics also privide us the knowledge of financial and economic situation and how to deal with the problems such as unemployment, standard of living, inflation, environmental sustainability, international trade and exchange rate determination, functioning of banking and financial sector in an economy. Standard of living is not only the increment in per capita income, but also improvement in health, education and surrounding environment. Apart from these, study of economics also helps an individual about decision making in daily life.

There are different branches in modern economics based on different aspects discussed above. Econometrics is such a modern branch in economics study, which deals with statistical analysis with modelling. This study helps in research studies regarding policy making, viability of a policy of either government or any organisation.