The document discusses basic economic concepts such as scarcity, opportunity cost, and types of resources. It defines key terms and provides examples to illustrate economic principles. Specifically, it explains that resources are scarce because human wants are unlimited but resources used to produce goods and services are limited. It also gives examples of different types of resources and discusses the concept of opportunity cost through examples such as career choices.

1. Basic economic concepts
• Scarcity and Choice
• Opportunity cost

2. Human wants
• Unlimited wants

3. Resources
• used to produce goods / services to
satisfy human wants
• limited in supply
• scarce: i.e. their quantities are
insufficient to satisfy all human wants

4. Types of resources
• Natural resources: e.g. sunshine, rain,
crude oil
• Human resources: labour service
• Man made resources: e.g. machines,
equipments

5. Scarcity
• Meaning: Resources are insufficient
to satisfy ALL human wants
• A relative concept: we want more than
we have
• Basic economic problem in human
societies

6. Do they face scarcity
problem?
• United States
• Hong Kong
• North Korea
• Africa

7. Is sea water scarce?
• Is it fixed in supply?
• Do we want more sea water than we
have?
• Sea water is not scarce

8. Are they scarce?
• Sunshine in Thailand
• A free sample of candies given at a shopping
centre
• Fresh air in a café with many smokers
• Sand in the desert

9. Are they scarce?
• Sunshine in Thailand 
• A free sample of candies given at a shopping
centre 
• Fresh air in a café with many smokers 
• Sand in the desert 

10. Competition
• We compete for the use of limited
resources
– 2 ways of competition
– Price competition
– Non price competition e.g. waiting,
examination, lucky draw, violence…

11. Making choices
• Which restaurant will you go for lunch?
• What would you like to study at university?
• What will you buy with $100? CD or
dress ?
• Which girl (boy) will you marry?

13. What is economics?
• It studies how we allocate the limited
resources to satisfy unlimited wants

14. Opportunity cost
• Opportunity cost is the highest-valued
option forgone

15. Choice among options
• Rank options according to a person’s
preference order
• Option 1 going to cinema
• Option 2 going to sing karaoke
• Option 3 sleeping at home

16. What is the cost of going to
the cinema?
• Going to sing karaoke (highest-valued
option forgone)
• We cannot choose option 2 and option
3 at the same time, we only forgo
option 2 when we select option 1

17. Choosing a career / job
• Option 1 being an actress ( $10 Mn. p.a.)
• Option 2 being a nurse ( $ 0.5 Mn. p.a.)
• .
• Income forgone being an actress < income
forgone being a nurse
• Cost being an actress < cost being a
nurse
• Choose the job with the lowest opportunity
cost

18. More elderly found in queues
• Before festivals, wait for gifts (rice,
mooncakes, red envelopes etc)
• In public clinics
• Income forgone by elderly < income
forgone by working persons
• Cost of waiting by elderly < cost of
waiting by working persons

19. Full cost
• Option 1 going to a 1 hour concert and pays
$200 for a ticket
• Option 2 working in Park’n as a salesman
earning $30 per hour
• Option 3 working as a tutor earning $100
per hour
• Full cost of attending the concert = price of
ticket + income forgone (highest-valued
option forgone)
• Full cost of attending the concert = $200 +
$100 = $300

20. Complimentary tickets
• Going to Hong Kong Disneyland
• Ticket : Free of charge
• Money spent on food, transport..=$200
• Income forgone = $500
• Full cost of going for Disneyland (HK)
=$700

21. Is Time a cost?
• Price of a mobile phone =$1 800
• Search = one evening
• Income forgone while searching =
$200
• Opportunity cost of buying the mobile
phone is $2 000

22. Uses of a flat
• Mrs Lo has the following options for her flat
in Shatin :
• Option 1 Owner occupied
• Option 2 Vacant
• Option 3 Lease with a rental income
$50 000 per year
• Suppose she chooses to live in her flat, what
is her cost of living in that flat?

23. Social Cost
• Building a new railway $100
million
• Creating pollution nearby (e.g. cutting
trees, noises) $5 million
• Social cost of building highway
• = private cost + external cost
• = $105 million

25. Miss Cheng could spend ttwwoo hhoouurrss aatt aa ccoonncceerrtt oorr
ttuuttoorriinngg aa ssttuuddeenntt aatt $$7700 ppeerr hhoouurr.. SShhee ccoouulldd uussee tthhee ttiimmee
oonn ppaaiinnttiinngg iinnsstteeaadd aanndd eeaarrnn aa ttoottaall ooff $$117700.. IIff tthhee pprriiccee ooff
tthhee ccoonncceerrtt ttiicckkeett iiss $$225500,, wwhhaatt iiss tthhee ooppppoorrttuunniittyy ccoosstt ooff
hheerr cchhooiiccee ooff ggooiinngg ttoo tthhee ccoonncceerrtt??
AA.. $$441100 BB.. $$442200 CC.. $$443300 DD $$444400

26. NNoo.. ooff ccoouuppoonnss GGiiffttss
55
1155
2200
CCuupp
BBaagg
CCaammeerraa
MMaarryy hhaass aaccccuummuullaatteedd 2200 CCoouuppoonnss..
WWhhaatt iiss tthhee ooppppoorrttuunniittyy ccoosstt ttoo hheerr
iiff sshhee uusseess tthheemm ttoo eexxcchhaannggee ffoorr oonnee
ccaammeerraa??
AA..CCuupp BB.. BBaagg CC.. CCuupp aanndd BBaagg DD.. CCuupp oorr BBaagg

27. Which of the
following statements
about scarcity is true?
A. Once a choice is made,
the problem of scarcity
is solved.
B. A good is scarce if not
everyone has it.
C. Scarcity means unlimited
human wants.
D. Both rich people and poor
people face the problem
of scarcity.
Answer: D

28. Which of the following are opportunity
costs of attending school?
(1) Poor examination results
(2) Income forgone
(3) School fees
(4) Expenditure on dinners
A. (1) and (4) only
B. (1) and (3) only
C. (2) and (3) only
Answer: C. (2) and (3) only D. (2) and (4) only