what is economics

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 …

…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**