Ch. 1—Ten Principles of Economics
Economics is the study of:
how society manages it’s scarce resources.
You have the afternoon free. You have a choice between going to the movies with a friend or studying
economics for three hours. If you go to the movies, you will spend $8.00 on a ticket and $4.50 on
popcorn. If you choose to study economics for three hours, you will raise your exam grade by 10 points.
Refer to Scenario 1-1.
What is your opportunity cost of going to the movies?
What is your opportunity cost of studying economics?
Debbie quits her job, which pays $30,000 a year, to finish her college degree. Her annual college
expenses are $10,000 for tuition, $2,000 for books, and $700 for food. What is her opportunity cost of
attending college for the year?
Zack quits his job at a consulting firm, which pays $40,000 a year, to enroll in a two-year graduate
program. His annual school expenses are $30,000 for tuition, $2,000 for books, and $600 for food. What
is his opportunity cost of attending the two-year graduate program?
Give an example of a trade-off faced by society.