In this assignment, you will gain insight into the methods economists use to study economic behavior and the economy. You will also examine production possibilities, the concepts of
opportunity costs and increasing opportunity costs, and marginal cost and marginal benefit—all vital skills for the global business
leader.
Requirements
This assignment has three parts. Be sure you have completed all
three parts before submitting.
Part I
Below is a production possibilities table for consumer goods
(butter) and capital goods (guns).
Production Possibilities
Type of Production Production Alternative A Production
Alternative B Production Alternative C Production Alternative D
Production Alternative E Production Alternative F Production
Alternative G
Butter 0 1 2 3 4 5 6
Guns 14 13 11 9 7 4 0
Graph the data provided in the table using Excel:
Type your data into an Excel spreadsheet.
With your mouse, highlight the data only.
Go to “insert.” Click on “scatter.”
Click on “smooth lines chart.”
Select the line chart. Plot data drawing line.
Based on the graph you created, complete the following:
Analyze the graphed data to develop assumptions, referencing
the possibility curve.
Identify the specific assumptions that underlie the production
possibilities curve.
Determine the cost of more butter, if the economy is at point C.
What would be the cost of producing more guns? How does the
shape of the production possibilities curve reflect the law of
increasing opportunity costs?
Suppose this hypothetical economy were producing only 1 item
of butter and 10 guns, and this was depicted by this production
possibilities table and curve. What conclusions could you draw
about this economy’s resource utilization?
Determine whether this economy is able to produce outside its
current production possibilities. How might technological
changes affect the production possibilities curve? How can
international trade allow consumption above its production
possibilities curve?
Part II
Analyze the concept of opportunity cost.
Explain what is meant by opportunity cost.
Explain how opportunity cost relates to the definition of
economics.
Determine if allocating advertising expenditures to boost sales or
investing in a new plant and equipment would entail the greater
opportunity cost. Explain and support your response.
Part III
Apply the concept of marginal cost and marginal benefit to real-
world decisions.
Provide two examples of recent decisions you made in which
you, either explicitly or implicitly, weighed marginal cost and
marginal benefit.
Additional Requirements
Include a title page and reference page.
Include 3–4 pages, not counting title page and reference page.
Use at least two scholarly or professional resources.
Use APA format for citations and references.
Set your assignment in Times New Roman, 12 pt., double
spaced.
INTRODUCTION
This unit introduces the core concepts of economics. The term comes from the ancient Greek words oikos, which means house, and nomos, which means custom or law. The term means, basically, household management. However, it has taken on a much broader connotation in the last few centuries. Today it means the study of households, consumers, businesses, and even nations. In its broadest sense, economics is the study of how to fill unlimited wants with limited resources.

You will examine the two most modern forms of economic activity—the free market and the command economy—and the advantages and disadvantages of each. You will learn how scarce business and household resources are allocated and how consumers decide what to consume, how much to consume now, and how much to consume later. You will also explore the basic forces of demand and supply, how equilibrium (where demand equals supply) is reached, and what forces will change equilibrium.

OBJECTIVES
To successfully complete this learning unit, you will be expected to:

Examine the concepts of demand and supply.
Develop better understanding of how economic decisions affect the market system.
Explain the conflict that exists between social equality and a free-market system.