Economic Analysis



Economic Analysis

Introduction

The study is made to discuss the fundamental concepts of economics and with the application of those concepts in some case questions. The below discussion covers the answers of the questions related to opportunity cost, shifting of production possibility curve and the impact of free trade on the output of European countries.

Discussion

Opportunity Cost

According to (Kanshimike W, 2009), in economic the opportunity cost is the value of next most high value of the alternative use of resource. For instance the approximate dollar cost of the tuition and other fees is $1,350 monthly. It includes tuition fee, registration fee for semester and the course fee for the month. By taking this course I have to pay this fee and also have to spent time in order to learn the course.

There are two types of cost which incur to learn this cost. Cost in terms of money and cost in terms of time required to learn this course. The cost also incur in terms of room, board and recreation incidentals, books, clothing and transportation. If we consider narrow budgeting of this cost then many of the items are not the part of opportunity cost. Like I have to incur expenses for board and room wherever I will be other than student. In order to figure out hours we assume a standard work year of 2,000 hours. Multiple office jobs involve less work hours average working hours in the U.S. although if I do a job in place of attending college and suppose I have a job at $8 per hour that gives you $1328 per month before taxes. After the deduction of taxes the income will be reduced. Working a another job for high pay and more working hours may ease my financial problems but then I will not be able to do social and entertainment activities which is an essential part of an healthy life style. In a whole the monthly expense to attend college does not fully reflect the opportunity cost to taking this course.

Extraction of Crude Oil

Extraction of crude Oil from the land reflect the economic growth as it also leads to the extraction of various goods as by products with the extraction of crude oil. Crude oil is consist of many other by products by which country like Canada generate revenue to larger extent and thus economic growth can be boosted. From the extraction of crude oil the country like Canada is generating large amount of revenue by trade and also by utilizing the products obtained from the extraction in industrial sector. The opportunity course of stopping the extraction of crud4e oil will be decreasing in revenue due to less trade; production in industrial sector will also be affected. The extraction of oil remains the best use of land until when the rate of extraction does not exceed to the rate of depletion. It means that when the rate of depletion will be more than the extraction then there will be no oil for ...