Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Participatory economics wikipedia , lookup
Non-monetary economy wikipedia , lookup
Social credit wikipedia , lookup
Criticisms of socialism wikipedia , lookup
Circular economy wikipedia , lookup
Transformation in economics wikipedia , lookup
Non-simultaneity wikipedia , lookup
Economic democracy wikipedia , lookup
ECON 210 Prepared by Linda Habibi LO 1_Basic Econ Concepts ECON 210: MICROECONOMICS Learning Outcome 1: Basic Economic Concepts What is Economics? Nobel Prize Laureate Paul Samuelson's definition is as follows: “Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people.” Microeconomics and Macroeconomics Microeconomics ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Macroeconomics ____________________________________________________________________________________ ____________________________________________________________________________________ _________________________________________________________________ Positive versus Normative Economics Positive Economics – ______________________________________________________________________________ ______________________________________________________________________________ Normative Economics – ______________________________________________________________________________ ______________________________________________________________________________ Exercise: Identify which of the following newspaper statements is normative and which is positive. Arabianbusiness.com Thursday, 28 August 2008 Dubai World posted profits of $287 million for first half of 2008. Arabianbusiness.com Friday, 29 August 2008 The dirham must be depegged immediately," said Khalaf Al-Habtoor, chairman of conglomerate Al-Habtoor Group, quoted UAE daily Emirates Business 24/7. "The implications of the dollar peg have really begun to affect business and markets." http://www.arabianbusiness.com/505874-depeg-immediately-urge-uae-businesses Friday, 29 August 2008 The UAE is among four states in the GCC - including Saudi Arabia, Qatar and Bahrain - that are maintaining dollar pegs until they negotiate a single currency as early as 2010. http://www.arabianbusiness.com/516145-uae-fx-committee-recommends-sticking-with-dlr-peg The Economic Problem Exercise: Compare the two pictures that your teacher shows you. 1. Which picture shows people living in a developed country? 2. Which picture shows people living in a developing (less developed) country? 3. What needs do the two groups of people have in common? _____________________________ _____________________________________________________________________________ 4. Which group will not be able to satisfy all their needs? _________________________________ _____________________________________________________________________________ 5. What do you think are the wants of people living in a developed country? _______________ _____________________________________________________________________________ 6. What do you think are the wants of people living in a developing country? _______________ ____________________________________________________________________________ 7. Why can’t the wants of either group or people be satisfied? ___________________________________________________________________________ 8. What do you think are the main differences between needs and wants? ___________________ ____________________________________________________________________________ The fundamental economic problem facing individuals and societies is that resources are ______ (scarce/unlimited) but wants are (scarce/unlimited) Economics: is the study of how societies use their scarce or limited resources to satisfy their peoples’ unlimited wants as fully as possible. 2 ECON 210 Prepared by Linda Habibi LO 1_Basic Econ Concepts The Three Fundamental Questions Exercise: Tropical Trouble Divide into groups of three or four people. Imagine that you are part of the crew of a cargo ship. After weeks at sea, there is a violent storm that forces your ship on to the rocks and a group of you are shipwrecked on a deserted island. You save what you can from the ship but most of your supplies are lost in the storm. The next day you examine your available resources. You realize that the wreck of the ship provides metal and wood, and the natural vegetation of the uninhabited island provides a valuable source of food. In your group discuss and provide answers to the following questions: 1. What is the main economic problem facing your group of survivors? __________________ 2. Decide the best way of using the resources available to you by answering the following questions: What will we produce? ________________________________________________________ How will we produce the goods? ________________________________________________ Who will receive the goods? ______________________________________________ The problem of unlimited wants and limited economic resources forces each society to make three basic choices, to answer the "three fundamental questions" of economics which are: 1) What goods and services will we produce and in what quantities? 2) How will these goods and services be produced? 3) Who will receive the goods and services? Four Factors of Production Factors of Production are resources or inputs used by firms in their production processes in order to produce goods and services used either for final consumption (consumer goods) or for use in further production (capital goods). They are classified into the following four broad categories called the Factors of Production: 1) Land: consists of the geographical surface area plus anything it contains. Land’s reward (payment) is _____. Examples: 2) Labor: consists of the human and mental time and effort spent in production process. Labor’s reward is ______. Examples: 3) Capital: (also called real capital) is the durable (man-made) goods used to produce other goods and services. Capital’s reward is ________. Examples: 4) Entrepreneurship (Enterprise): is the individual(s) who take the economic risk of a business and organize the other factors of production. Enterprise’s reward is _______. Examples: The Production Process: Fill in the following to show the production process. Factors of Production ______ _______ Production Process _______________ ________ ________ 4 ECON 210 Prepared by Linda Habibi LO 1_Basic Econ Concepts Exercise: The workings of a market economy Omar Basamah has twenty people working in his clothing factory in Lebanon. He owns a piece of land, a factory and has ten machines. Omar wants to make as much profit as possible. Presently he uses his scarce resources to produce woolen sports jackets. Which factors of production is Omar using in his factory? __________________________________ The most recent fashion among young people is leather jackets. Omar begins to notice his sales and profit are falling. Omar decides that he can make more money if he switches his scarce resources to the production of leather jackets in order to meet the market demand. How do businesses in a market economy decide what to produce? ___________ There are two methods that Omar can use to make leather jackets. For the first method, Omar needs only 10 of his workers and 5 machines. Each leather jacket will cost $30 to produce. For the second method, Omar needs to use all 20 workers and 8 machines. Each leather jacket will cost $40 to produce. Which method will Omar use? _________ Why? _____________________ What is the main goal of businesses in a market economy? _________________________ How do businesses in a market economy decide how to produce goods and services? ___________ Omar notices his profits have increased and are even more than when he was producing woolen sports jackets. The fashion conscious young people who can afford to pay for the more expensive leather jackets are satisfying their wants. In a market economy who receives the goods and services that businesses produce? ___________ Economic Systems: The Circular-Flow of Income Model We can represent the operation of a capitalist economy using a circular-flow of income diagram. This diagram is a way of showing how the economy works to circulate output, spending and incomes in an economy over a period of time so that wants are satisfied. In our simple model of the economy, we will assume there is only a private sector (no government) consisting of households and firms. Fill in the following blanks. Then use the information to fill in the flows in the Circular Flow of Income diagram below. 1) Households own the resources (factors of production), _________, _________, _________ and __________. These resources are channeled into firms. In the following diagram fill in the box that shows factors of production. 2) In return for their factors of production, households receive income. Income received by labor is _______. Income received by land is _________. Income received by capital is ______. Income received by enterprise is _________. In the following diagram fill in the box that shows income. 3) Firms produce the goods and services that households buy. In the following diagram fill in the box that shows goods and services. 4) Households use their income to buy goods and services produced by firms. The income households spend on firms’ output is known as consumption expenditure (given the symbol C). . In the following diagram fill in the box that shows goods and services. 5) Label the flows that show where goods and services are bought and sold the “Product Market”. 6) Label the flows that show where factors of production are bought and sold the “Factor Market”. (6)___________________ MARKET (1) (2) FIRMS HOUSEHOLDS (3) (4) (7) ___________________ MARKET 6 ECON 210 Prepared by Linda Habibi LO 1_Basic Econ Concepts Exercise: Now let’s add government and foreign trade to the circular flow of income diagram. When we add government and foreign trade to the diagram, we have leakages (money that goes out of the system) and we have injections (money that comes into the system. Study the following Circular Flow diagram and then use the diagram to answer the questions: Households consume a portion of their income and they _________ a portion of their income which represents a ___________ (leakage/injection) . Producers can borrow some of the savings of households and use it as ________which is a(n) _____________ (leakage/injection). Households pay part of their income to the government in the form of _______ which is a(n) _____________ (leakage/injection). Government uses the taxes as a part of their government spending which is a(n) _____________ (leakage/injection). Households use some of their income to buy _______from foreigners (foreign countries) which is a(n) _____________ (leakage/injection). Foreigners buy ___________from the economy which is a(n) _____________ (leakage/injection). Leakages from the Circular Flow of Income are _____________, __________________ and ___________________. Injections into the Circular Flow of Income are _____________, ________________ and _______________. Choice and Opportunity Cost Exercise: Scarce resources have alternative uses Below is a list of resources. See how many alternative uses you can find for them, that is, see how many different goods and services they can help to produce. 1. An area of land 2. An egg 3. A shovel People, countries and businesses must choose how scarce resources are to be used; they must choose which goods and services to make because they cannot make everything they want. Exercise: The nest best thing and Opportunity Cost Choosing between goods and services involves a very special cost. Imagine you have just bought the list of items below. List one other thing that you could have bought instead. What I have just bought What I could have bought instead Compact disc (Price - 50 AED) A car (Price – 210,000 AED) In the second column you listed your second best choices, or your best alternatives, to the objects in column one. The real cost of choosing one thing and not another is known as opportunity cost. The opportunity cost (next best alternative given up) of the compact disc is _____________. The opportunity cost (next best alternative given up) of a car is ______________. Why can’t we buy everything we want? Which resource is scarce? ______________________________ Opportunity cost arises not only when we buy things, but also when we choose one activity over another. The opportunity cost (next best alternative given up) of my attending HCT is _____________. Why can’t we do everything we want? What is scarce? ______________________________ Opportunity cost is the next best alternative (choice) you must give up when making an economic decision. Production Possibilities Curves (PPC) We can illustrate the concept of opportunity cost with a simple graph called a production possibilities curve (PPC) or a production possibilities frontier (PPF). A production possibilities curve shows the combinations of goods and services that an economy can produce using all its resources fully. We will assume that an economy can produce only two goods. The following table shows the production possibilities for Euro Land who can produce either cars or mobile phones in the following combinations using its resources fully. 8 ECON 210 Prepared by Linda Habibi LO 1_Basic Econ Concepts Production Possibilities showing constant opportunity cost EURO LAND'S PRODUCTION POSSIBILITIES ITEM A B C CARS (000) MOBILE PHONES (000) 16 0 12 12 8 24 D 4 36 E 0 48 As we move from production possibility A to B, Euro Land gains ____ mobile phones but loses ____ cars. Therefore the opportunity cost of 12,000 mobile phones is _____ cars. As we move from production possibility B to C, Euro Land gains ____ mobile phones but loses ____ cars. Therefore the opportunity cost of 12,000 mobile phones is _____ cars. As we move from production possibility C to D, Euro Land gains ____ mobile phones but loses ____ cars. Therefore the opportunity cost of 12,000 mobile phones is _____ cars. As we move from production possibility D to E, Euro Land gains ____ mobile phones but loses ____ cars. Therefore the opportunity cost of 12,000 mobile phones is _____ cars. What is the opportunity cost in each of the above movements from one production possibility to the next? _________________________________________________________ Therefore, we say the opportunity cost is _______ (constant/increasing/decreasing). In the case of constant opportunity cost, resources are equally efficient and hence can be efficiently allocated to the production of either good. Draw the PPC curve below for Euro Land below putting Mobile Phones on the y-axis and Cars on the xaxis and label it PPC. Is your curve a straight line or a curved line? _____________ A straight-line production possibilities curve shows constant opportunity cost. A curved production possibilities curve (PPC) shows increasing opportunity cost: Let’s look at another example. Japan can produce either capital goods or consumer goods as shown in the following production possibilities table when it uses its resources fully. Capital goods are all man-made resources used to produce other goods and services. Consumer goods are goods and services used by the final consumer. Increasing opportunity cost Japan’s PRODUCTION POSSIBILITIES ITEM A B C 0 500 CAPITAL GOODS (000) CONSUMER GOODS(000) 1 475 2 425 D 3 325 E 4 175 F 5 0 As we move from production possibility A to B, Japan gains ____ capital goods but loses ____ consumer goods. Therefore the opportunity cost of __________ capital goods is _____ consumer goods. As we move from production possibility B to C, Japan gains ____ capital goods but loses ____ consumer goods. Therefore the opportunity cost of __________ capital goods is _____ consumer goods. As we move from production possibility C to D, Japan gains ____ capital goods but loses ____ consumer goods. Therefore the opportunity cost of __________ capital goods is _____ consumer goods. As we move from production possibility D to E, Japan gains ____ capital goods but loses ____ consumer goods. Therefore the opportunity cost of __________ capital goods is _____ consumer goods. As we move from production possibility E to F, Japan gains ____ capital goods but loses ____ consumer goods. Therefore the opportunity cost of __________ capital goods is _____ consumer goods. What is happening to the opportunity cost in each of the above movements from one production possibility to the next? (increasing/ decreasing /remains constant) ________________________ In the case of increasing opportunity cost, resources are NOT equally efficient and hence can be efficiently allocated to the production of either good. In the real world, society’s resources are usually better suited for the production of certain goods and services than for others; therefore, the PPC is bowed (curved) outwards from the origin. Hence our previous assumption that resources are equally efficient and hence can be efficiently allocated (distributed) to the production of either good is not true in the real world. 10 ECON 210 Prepared by Linda Habibi LO 1_Basic Econ Concepts Japan’s production possibilities curve illustrates an important principle known as the law of increasing costs: as more of a good is produced, its opportunity cost will increase which is shown on a PPC graph by a PPC bowed (curved) out from the origin. Draw the PPC curve for Japan in the following box putting Consumer goods on the y-axis and Capital goods on the x-axis and label it PPC1. Graph the curve and label it PPC1. Make sure to use the correct scale and correctly label the axes. Use the above table and graph for Japan to answer the following questions. 1. Assume Japan decides to produce 1,000 capital goods and 400,000 consumer goods. Draw a point on your graph to represent this production combination and label it “U”. What is the problem with this point? ______________________________________________________________________________ 2. Assume Japan moves from point “U” to producing 1,000 capital good and 475,000 consumer goods. In order to get 75,000 more consumer goods, how many capital goods did Japan have to give up? ______ Therefore we can conclude that there is NO opportunity cost when we move from a point inside the PPC to a point on the PPC. 3. Assume Japan wishes to produce 3,000 capital goods and 500,000 consumer goods. Draw a point on your graph to represent this production combination and label it “I”. What is the problem with this point? ________________________________________________________________________ Based on our answers to the previous questions, we can make the following conclusions about the PPC: Points on the PPC are points of ________ (efficient/inefficient) production which means that we are getting as much output as possible from a given amount of inputs or resources. These points indicate full-employment of resources. Moving from one point on the PPC to another point on the PPC involves an opportunity cost. Points inside the PPC are ________ (efficient/inefficient) production points because more output can be achieved of one product without giving up any of the other product. Therefore moving from a point inside the PPC to a point on the PPC does NOT have an opportunity cost. These points show under-employment or unemployment of resources. All points in and on the PPC are possible, however, points outside the boundary are ________(possible/)impossible. Economic Growth Points outside the PPC can become possible in the future through economic growth. Economic Growth is an increase in a country’s ability to produce goods and services at full employment. A shift outwards in a country’s PPF shows economic growth. Let’s assume Japan gives its workforce more training so they can now produce more of both capital goods and consumer goods. Japan’s production possibilities have now increased as shown in the table below: Japan’s PRODUCTION POSSIBILITIES ITEM A B C 0 600 CAPITAL GOODS (000) CONSUMER GOODS(000) 2 575 4 525 D E F 6 425 8 275 10 0 Use the information in the above table and draw a new curve on the graph you drew for Japan in the above example. Label it PPC2. An increase in production capacity is described as economic growth and is shown by shifting the production possibilities curve to the right. A society can achieve Economic Growth in the future in any of the following ways: 1. 2. 3. 3. 5. 6. Improving the quality of resources. For example ____________________________. Increasing the quantity of resources. For example _______________________________. Using more technology which will cause productivity to _____ (increase/decrease). Increasing number of women in the work force. Note: This is NOT the same thing as putting the unemployed to work, which is only a movement from inside the PPF to a point on the PPF. More R & D (Research and Development). Producing more _____ (capital/consumer) goods today than________ (capital/consumer) goods. However, this means that the economy is giving up ________ (present/future) consumption for ______ (present/future) consumption. 12 ECON 210 Prepared by Linda Habibi LO 1_Basic Econ Concepts Benefits of Trade Trade between nations allows nations to acquire combinations of resources that are greater than they can produce. Trade does NOT shift out the PPC. Review Problems 1. A country can produce either cars and/or computers. The countries PPC is given by the production possibilities in the following table: Production Possibilities A Cars - x axis Computers - y axis 16 0 B 12 16 C 8 28 D 4 36 E 0 40 a) Graph the PPC next to the schedule (table) shown above. Graph cars along the x- axis and computers along the y-axis. Label this curve “PPC1”. Make sure to label all points (A to E) on the curve. b) Why do resources have to be moved from the production of cars to the production of computers as we move from one point to the next point along the PPC? Is there an opportunity cost as we move from one point to another point along the PPC? c) If the economy is operating at point C, what is the opportunity cost of producing 4 more computers? The opportunity cost of 4 more computers is ______ cars. d) If the economy is operating at point E, what is the opportunity cost of producing 4 more cars? The opportunity cost of 4 more cars is ______ computers. e) What happens to the opportunity cost of cars in terms of oil as you have moved from point C to B to A? The opportunity cost ______ (increases/decreases/remains constant) f) In the long run, if this economy provides computer training to workers who produce cars and computers, what effect will this have on the PPC? The PPC will ______ (shift inwards/shift outwards/not change) because the economy will experience ____________ growth. Redraw the PPC to show what happens. 2. Draw a correctly labeled circular flow diagram of an economy. Make sure to include the various markets, flows and sectors. What are the leakages? What are the injections? 14 ECON 210 Prepared by Linda Habibi LO 1_Basic Econ Concepts Exercise: Applying your Knowledge and Understanding: Reference: http://www.bized.co.uk/educators/16-19/economics/micro/activity/econintro.htm The Health Service Image: Should NHS money be spent on funding more operations, or should it go on training and employing more GPs? By Zarko Kecman A recurring theme of manifesto commitments made by the Labour Government in both 2001 and 2005 was the improvement of the health service. The problems facing the National Health Service (NHS) have been huge: under-investment, poor pay, inability to recruit and retain the right staff, endless competing demands on resources, the developments in technology and treatment and numerous crises have all contributed to the problem. Solving it is not going to be quick or easy but does highlight the central issue in economics - that of resource allocation and choice. The Chancellor has raised taxes (primarily through raising National Insurance) to pay for massive investment in the NHS. The NHS budget for 2005-6 is £76.38 billion, which accounts for 18% of total government spending, and 6.95% of total GDP. Despite these massive funds, problems still exist: waiting times for operations are stubbornly refusing to fall to the level the government would like; recruitment of new staff - especially doctors and specialist nursing staff - takes time and is not necessarily going to hit targets set; arguments continue over where NHS funds would be most appropriately spent - on preventative medicine, on more primary healthcare (GPs) on major health problems such as cancer and heart trouble - or on more mundane, but nevertheless debilitating conditions, such as hip replacement operations. The government therefore has to convince voters that this extra spending will eventually lead to an improvement in the service. Many in the UK would be willing to pay higher taxes if it could be proved that the extra spending would lead to a better service. However, the evidence is not so clear-cut. Suggestions therefore have been made about alternative methods of funding the NHS. One such system is a social insurance fund. With this system, employers and employees would have to pay a contribution from their salary into one of a number of competing schemes. Such schemes would be dedicated to providing the best possible use of funds for health care. The problem with such schemes is that it would increase business costs - possibly reducing employment! Another system could involve greater use of private health policies. Responsibility for this would be in the hands of the individual to ensure they had enough insurance cover to pay for any medical bills and treatment. This type of system is more common in the USA but there are many who criticise such a system. It invariably means some people who need the treatment cannot afford to pay health insurance; others may take a chance and decide they do not need insurance only to find themselves landed with huge debts if they do need treatment! The problem in the UK, however, is quite different to that in a country such as Tanzania in Africa. Tanzania is a poor country: it has a population of 35 million and has a national income of around £5.5 billion per year! The poor healthcare facilities have a significant impact on its ability to create wealth to improve its situation. Lack of preventative medicine means more people get sick from diseases such as malaria, typhoid and so on. This means they are unable to work, which means they do not earn enough money and so the government has a lack of funds through taxes to invest in the health service, which means... you get the picture! In Tanzania, significant effects can be observed through very simple treatments rehydration salts, anti-malaria netting and so on - which could, if the government of Tanzania had the funds, make a huge difference to the lives of the people and to the general health and wealth creation capacities of the population. The text above is typical of the sort of article available in newspapers and magazines such as 'The Economist', 'Newsweek' and so on. You will gain a great deal from reading all manner of relevant articles in your studies - but the secret is to read it like an economist!! Exercise: When reading the text 1. Look up any new vocabulary words. 2. Apply the following concepts: a. The fundamental economic questions. b. Choice and Opportunity costs c. Positive and normative economics d. Production Possibility Curves e. Wants and needs 16 ECON 210 Prepared by Linda Habibi LO 1_Basic Econ Concepts Exercise: Applying your Knowledge and Understanding: Reference: http://www.bized.co.uk/educators/16-19/economics/micro/activity/econintro.htm The London Olympic Bid - Money Well Spent? http://www.bized.co.uk/current/mind/2004_5/221104.htm The News Image Copyright: Tamas Szafko, stock.xchng The team for the London Olympic bid in 2012 flew to Lausanne, Switzerland on November 14th 2004 to hand in a 600 page bid document to the International Olympic Committee (IOC). The document details the technical aspects of the bid, which all the short-listed cities in the process must submit. The other cities are Madrid, Moscow, New York and Paris. The IOC will now go through the documents and will be further informed on the respective bids by visits to each city to put the plans into further context. The IOC will then meet to vote for the winning city in July 2005. The IOC consists of 128 members, and delegates will be visiting London to view the plans further from 16th to 19th February 2005. One of the key factors in the success of the Games bid will be the extent to which the public support it. There have been complaints that London is again the centre of an attempt to host a major sporting event - other cities such as Birmingham and Manchester have attempted to bid for having national sporting contests and facilities in their cities but feel they have been overlooked. Manchester held the very successful Commonwealth Games in 2002 but Birmingham lost out in its attempt to build the national stadium to replace Wembley. The fact that London is being used is important in the eyes of the world according to bid officials. The capital is a big draw and it was felt that bids centred on other parts of the UK would not have as high a chance of success. London is intending to build a new stadium for the main athletics events and will also make extensive use of existing world-renowned facilities to host other sports. Lords Cricket Ground would host archery, Wimbledon the tennis, the new Wembley Stadium the soccer and the Millennium Dome the gymnastics. Other sports would be held in and around London's parks and the new Olympic village is planned to be built in Stratford to the east of London. Image: A view of the proposed Olympic Park in east London. Copyright: Reproduced with kind permission of London 2012. Public support therefore is going to be a major factor in generating sufficient momentum to persuade the IOC that not only could London finance and host the games successfully but that it would be a project embraced and welcomed by people throughout the UK. Evidence suggests that support is growing but that public enthusiasm lags behind that of Madrid and Paris. Part of the reason for the contrasting enthusiasm maybe the traditional 'British reserve' and cynicism for such projects but it could also be due to the fears over the cost of staging the bid and hosting the Games. There is no doubting that Britain can host large scale successful sporting events - the public enthusiasm for the Commonwealth Games was widely praised but that also took time to capture the imagination. The cost however is something that does concern people. The bill for the Olympics in Athens in the summer of 2004 has been estimated at more than double the original budgeted target. The Greek finance minister has reported that the cost will amount to €9 billion or £6.3 billion. He also estimates that the final bill will be much higher given that the cost of developing the infrastructure for the Games has not yet been settled. Most Games it seems have suffered from cost pressures; the cost of the 2000 Games in Sydney was budgeted at £1 billion but went over budget and as far back as Montreal in Canada in 1976, the dreams of the Mayor of Montreal , Jean Drapeau, have left a legacy of a stadium that has been costly to maintain and which is still costing Montreal taxpayers money! Drapeau claimed in January 1973 that the Montreal Olympics would be self-financing and that it would even make a profit! Are budget and construction schedule overruns inevitable in large-scale projects? © iStock.com The budget for staging the Games in London has been set at around £2.4 billion, significantly less than the cost of staging the games in Athens. The organisers point to the numerous benefits that the Games will bring to the UK as a whole - but there again, every bidding committee is likely to make such claims! We have find some way of attaching relative values to the different decisions that could be made. The cost for the Games is estimated at £2.375 billion. What else could £2.375 billion buy? A new hospital in Manchester - a so-called super hospital - was estimated to have cost £400 million in 2001. The cost of building a new primary school in Worcestershire was estimated at £1.5 million, the capital cost of a new secondary school in Wales, £13 million. The average cost of constructing one mile of dual three-lane motorway in 1998 was estimated at £17.1 million. 18 ECON 210 Prepared by Linda Habibi LO 1_Basic Econ Concepts Using such information we can look at the 'cost' of staging the Games as follows: We could build nearly 6 new 'super hospitals'. We could build 158 new primary schools around the country or 18 new secondary schools. We could construct 140 miles of new motorway. Question: What important economic concept would you apply to this article? Explain.