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Running head: MANAGERIAL ECONOMIC
1
MANAGERIAL ECONOMICS
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MANAGERIAL ECONOMIC
2
PART A
List the concepts that economists think in terms of.
There are various concepts that are always mentioned by economists. Concepts include;
opportunity cost, profit, scarcity, demand, supply, government spending, investment and capital,
elasticity. Others such as money, recession, utility, unemployment, and efficiency are also terms
that are often used by economists.
Define opportunity cost.
Kenton (2019) defines opportunity cost as the benefits that a person will forego when he or she
prefers an alternative over another one. It is the loss of a potential gain that a business or a person
incurs from other options when one of the options is chosen. An example is where an individual
spends time going to the movie; he or she cannot spend the same time reading a book.
Use the concept of opportunity cost to explain why some things are not done.
In real life, individuals do some things at the expense of the other. For instance, we can choose to
read rather than playing since both of them cannot happen at the same time. In relationship to the
concept of opportunity cost, some things or values must be given up to acquire something else.
Therefore, all things cannot be done at the same time, and we have to do the other ones that are
perceived to have more value and leave the other ones that are perceived to have less value.
Every resource in the world can be put to alternative uses, and therefore, every decision must
have an associated opportunity cost.
Explain why economists consider costs and benefits, instead of …
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