Session (1.1.2) Opportunity Cost

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Objectives

By the end of this session, you should be able to:

define the basic economic problem;
explain the difference between needs and wants;
explain scarcity;
explain opportunity cost.

Engage

We need to start this session by dipping into the world of Economics. Do you think that there are enough resources to meet the needs and wants of everyone? Obviously, the answer is no.

Now watch this video on what we mean by the basic economic problem. Try to write some notes on what ‘scarcity’ means while you watch.

WATCH – Basic Economic Problem (YouTube)

Learn

Decisions must be made on the use of resources. Once resources are used for one business purpose, they cannot be used for another purpose.

Read this summary file about opportunity cost.

READ AND MAKE NOTES – Summary file 1.1.2

Read and make notes on pages 20 to 21 of your coursebook, using the summary file you have just read to enhance your notes.

Apply

Complete the Business in Action activity on page 21 of your coursebook. Again, this is described as a group activity and so you may wish to discuss your ideas with a friend or family member.

Consolidate

Watch this video on Opportunity Cost with real word examples.

WATCH – Opportunity Cost (YouTube)

You have completed two sessions so far and have already come across the important terms of factors of production and now opportunity cost. Start your own glossary of Business terms. You can use the one in your coursebook to help you.

Finish by completing this activity to summarise the session: