Scarcity, Choice and Opportunity Cost
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
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
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