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Module 1: Introduction to Economics

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XSIQ
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Economics - Cost of Choices

Opportunity Cost

In economics, when a choice is made with regard to resources, the
opportunity to do something else with the resources is given up. The cost
of the choice, therefore, is the next best alternative foregone.

Individuals make decisions about many things, including the following:

* How long to work.

* How much money should be saved.

* What to spend money on.

Each decision involves an opportunity cost. For example if an individual
works overtime [1], the opportunity cost is the leisure time that is
sacrificed. Spending more of your income means less is saved, and buying a
CD means less money is available for dining out.

Business decisions include:

* What goods to produce.

* What resources will be used.

* What to spend money on.

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Links:
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[1] http://alison.com/#