We make choices as consumers every day. Opportunity cost is defined as a person's "next best alternative" or "the cost of what you give up when you make a choice."

Think of a recent decision you made regarding your career. What was your opportunity cost for making that choice? What was your "next best alternative"?

Objective: Identify current trends in macro and microeconomics.
Use supply and demand to analyze business activities to formulate business plans.

Instructor Comments:

To complete this IP, consider the standard house, 3-bedroom, 2-bath house. Compare this standard house in different locations in the US by collecting the price information. The differences in the price of "same house" in different locations can be explained using demand and supply. ("location" is NOT an answer to this IP)

The housing price is determined by demand and supply of housing. State the determinants of demand and of supply that are consistent with economic theory and are plausible. (1) The determinants of demand are the factors that affect the decision to buy s house and the maximum price that the buyer will pay. (2) The determinants of supply are the factors that affect the decision to sell another unit and the minimum price that the seller will accept. The learning objective is to demonstrate the proper use of concepts in market analysis. In particular there should be a discussion on how the market responds to excess demand and a discussion on how the market responds to excess supply. Excess demand and excess supply are generated if demand or supply shifts. There should be a discussion on how changes in determinants of demand and changes in the determinants of supply affect the housing market. Excess demand and excess supply should be included in your analysis.

Warning and suggestion: you are not required to "prove" or justify your selection of the determinants of demand and supply. But your discussion and selection of a factor or a determinant must be reasonable and plausible.