Week_1_Assignment

Week_1_Assignment - Matthew McCoy ECON201 Week 1 Assignment...

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Matthew McCoy ECON201 Week 1 Assignment June 10, 2011 Professor John Volpe 1. What is an opportunity cost? How does the idea relate to the definition of economics? Which of the following decisions would entail the greater opportunity cost: Allocating a square block in the heart of New York City for a surface parking lot or allocating a square block at the edge of a typical suburb for such a lot? Explain. An opportunity cost refers to the amount of other products that must be foregone or sacrificed to produce a unit of a product. The idea relates to the definition of economics where society makes optimal choices under conditions of scarcity. Allocating a square block in the heart of New York City for a surface parking lot would entail a greater opportunity cost than allocating a square block at the edge of a typical suburb. For one, the cost of land is higher in New York City, so building a surface parking lot would be more expensive there. Another reason is because with all of the businesses that operate in the heart of New York City, devoting a square block might mean potentially sacrificing higher revenues for the city because of the number of tourists that visit the city versus the number of
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This note was uploaded on 09/24/2011 for the course ECON 202 taught by Professor Unknown during the Spring '08 term at Mountain State.

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Week_1_Assignment - Matthew McCoy ECON201 Week 1 Assignment...

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