Scarcity, Choice and Opportunity Cost

Only available on StudyMode
  • Download(s) : 634
  • Published : April 9, 2013
Open Document
Text Preview
ASSIGNMENT No. 1
ECONOMIC ANALYSIS -522- SPRING 2010
Q. 1
DISCUSS IN DETAIL THE TERM ECONOMIC RESOURCES WITH REFERENCE TO SERVICE INDUSTRY. EXPLAIN THE LINK BETWEEN SCARCITY, CHOICE AND OPPORTUNITY COST. Ans:
ECONOMIC RESOURCES are the assets (things of value) which an economy (or business) may have available to supply and produce goods and services to meet the ever-changing needs and wants of individuals (in the case of a business) and society (in the case of society as a whole.) REA (Resources, Events, Agents) is a method for modeling business processes. Unlike all other methods, the REA model reveals why business processes occur, and provides for full traceability of all business transactions. The REA model is also closer to the reality than any other business modeling method, which is very useful in model-driven design of software applications. Figure below illustrates the most fundamental REA concepts, which are economic resource, economic agent, economic event, commitment, and contract.

Economic Resource is a thing that is scarce, and has utility for economic agents, and is something users of business applications want to plan, monitor, and control. Examples of economic resources are products and services, money, raw materials, labor, tools, and services the enterprise uses. Economic Agent is an individual or organization capable of having control over economic resources, and transferring or receiving the control to or from other individuals or organizations. Examples of economic agents are customers, vendors, employees, and enterprises.

Page 1 of 23

Economic Event represents either an increment or a decrement in the value of economic resources that are under the control of the enterprise. Some economic events occur instantaneously, such as sales of goods; some occur over time, such as rentals, labor acquisition, and provision and use of services. Commitment is a promise or obligation of economic agents to perform an economic event in the future. For example, line items on a sales order represent commitments to sell goods. Contract is a binding agreement between two or more parties for performing, or refining from performing, some specified act(s) in exchange for lawful consideration. It is a collection of commitments and terms. Under the conditions specified by the terms, a contract can create additional commitments. Thus, the contract can specify what should happen if the commitments are not fulfilled. For example, a sales order is a contract containing commitments to sell goods and to receive payments. The terms of the sales order contract can specify penalties (additional commitments) if the goods or payments have not been received as promised. ECONOMIC RESOURCES -SERVICE INDUSTRY

Resources Required
• Determine resources required
• Determine existing resources
• Identify resource gaps and available suppliers
• Develop access to needed resources
Manage the Enterprise
Develop management style
Understand key variables for success
Identify problems and potential problems
Implement control system
Develop growth strategy
What steps are necessary for growth strategy?
Product evaluation process
• Process of developing & commercializing an innovation)
Iterative Synthesis:
• Interaction of knowledge and social needs that start Product development process
Ordinary Innovations:
• New product with little technological change (M Bulb / Tube light) Technological Innovations
• New product with significant technological advancement (ES) Breakthrough
o New product with some technological change (VCR/DVD)
Government as an innovator (Maquiladora)
Technology Transfer
The following are the four basic types of economics resources: • Land – natural resources such as iron ore, gold, diamonds, oil, etc. • Labor – human resources such as wage-earning workers
• Capital – plants and equipment used in the production of final goods, such as assembly lines, trucks, heavy duty machinery, factories, etc.
•...
tracking img