What Are Choice and Opportunity Cost?
Resources such as money, land, labour, and machines are limited, so people must make choices about how to use them.
- Individuals choose how to use their money (spend or save).
- Businesses choose how to use workers and machines.
- Governments choose how to use resources to benefit the largest number of people.
When you choose one option, you give up the next best option.
🔹 Opportunity cost is the benefit that is lost when one choice is made instead of another.
Example:
If land is used to build a hotel, it cannot be used for farming. The lost farming benefit is the opportunity cost.
Advantages and Disadvantages of a Market Economy
Advantages of a Market Economy
- Goods and services are produced to meet people’s demand
- Businesses try to be efficient to increase profits
- People are motivated to work harder to improve their standard of living
- Higher productivity helps the whole economy grow
- Competition encourages innovation and new technology
Disadvantages of a Market Economy
- Businesses focus on profit, not essential services like public health or education
- Some workers may be paid very low wages
- People who cannot work (e.g. due to disability) may be excluded
- Businesses may overproduce goods they cannot sell
- Environmental costs, such as pollution, may be ignored
Key Vocabulary (Grade 7)
- Choice: Selecting one option from several possibilities
- Opportunity cost: What you give up when you make a choice
- Productivity: How efficiently goods and services are produced
- Competition: Businesses trying to attract customers



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