Understanding Microeconomics and the Principles of Individual Choice in the UK

Task 1: How Resource Scarcity and Opportunity Cost Impact Microeconomic Decision Making for Households and Individuals in the UK

Assessment Questions: Understanding microeconomics and the principles of individual choice

The following four “Principles of Individual Choice” are fundamental aspects of microeconomics:

1. People must make choices because resources are scarce.
2. The opportunity cost of an item—what you must give up to get it—is its true cost.
3. “How much” decisions require making trade-offs at the margin: comparing the costs and benefits of doing a little bit more of an activity versus doing a little bit less.
4. People usually respond to incentives, exploiting opportunities to make themselves better off.

Task 1: Answer the following question

“Using MOD3327 module content and the Krugman & Wells textbook, explain how resource scarcity and opportunity cost impact microeconomic decision making for households and individuals in the UK. Explain these economic concepts using real examples from within the UK economy and social environments within the past three years (2019-2021). Analyse and explain what you perceive to be the biggest challenge for some households with respect to resource scarcity and opportunity costs.”

Task 2: Answer the following question

“Using MOD3327 module content and the Krugman & Wells textbook, explain how cost-benefit analysis and incentives impact microeconomic decision making for households and individuals in the UK. Explain these economic concepts using real examples from within the UK economy and social environments within the past three years (2019-2021). Analyse and explain how the market economy uses consumer habits of cost-benefits analysis and desire for incentives to drive their business profits.”