Discussion by examples... Continued (5 minutes)

So to sum up consider these four points.

• First is that two fundamental facts emerge, i.e.:
  • A society’s economic wants (for individuals and firms) are unlimited and insatiable (cannot be completely satisfied).
  • These wants cannot be met by the limited resources (the means for producing goods and services are scarce).
• Secondly, scarcity imposes choices on individuals or society
• Thirdly, choices result in sacrifices or opportunity cost.
• And finally, opportunity cost is the next best forgone alternative (not all forgone alternatives)

Group Work – Opportunity Cost (10 minutes)

• If you were given 50,000 shillings in the situation of chapatti flour and Jembes above, but now the price of Jembes is 500 shillings each while Unga is still 200 shillings. How would you allocate the 50,000 towards Jembes or Unga or a combination of both if you MUST spend all the 50 000 shillings?
• In your discussions, ensure that all the money is spent. Try to ascertain how many combinations are possible