Problem
Read the following excerpt and answer the questions below:
Decisions ... Decisions in the Social Media Age.
To post or not to post? Every day we are faced with a myriad of decisions, from what to have for breakfast, to which route to take to class, to the more complex-"Should I double major and add possibly another semester of study to my education?" Our response to these choices depends on the information we have available at any given moment. Economists call this "imperfect" because we rarely have all the data we need to make perfect decisions. Despite the lack of perfect information, we still make hundreds of decisions a day. Now we have another avenue in which to gather information-social media. Outlets like Facebook and Twitter are altering the process by which we make choices, how we spend our time, which movies we see, which products we buy, and more. How many of you chose a university without checking out its Facebook page or Twitter stream first for information and feedback? As you will see in this course, what happens in economics is affected by how well and how fast information disseminates through a society, such as how quickly information travels through Facebook. "Economists love nothing better than when deep and liquid markets operate under conditions of perfect information," says Jessica Irvine, National Economics Editor for News Corp Australia.
1) Define economics and the role of scarcity in decision-making.
2) Explain opportunity cost in context of the excerpt above. Provide two examples of an opportunity cost.
3) In each of your examples of opportunity cost, how can you determine the actual cost to an individual numerically? How can individuals make better decisions using opportunity cost based on this numerical value?
4) Draw and graph one production possibilities curve that demonstrates your example. Be sure to label the y-axis, x-axis, PPC curve, and how to identify the opportunity cost in the graph.
5) In your graph, explain and show an increasing opportunity cost.