Assignment No: 1

Student Name: USMAN SAlAHUDDIN

Student ID: 11382

Q. 1) Why Study Economics? page 36

Note: There are four main reasons to study economics:

ANWSER:

Economics is the study of how individuals and societies choose to use the scarce
resources that nature and previous generations have provided. The key word in this
definition is choose.

Economics is a behavioral, or social, science. In large measure, it is the study of how people
make choices. The choices that people make, when added up, translate into societal
choices.

WHY STUDY ECONOMICS? There are four main reasons to study economics:

 to learn a way of thinking,

 to understand society,
 to understand global affairs,
 to be an informed voter. 

A) To Learn a way of thinking

Three fundamental concepts:

o Opportunity cost
o Marginalism
o Efficient markets 

Opportunity Cost: Opportunity cost the best alternative that we forgo, or give
up, when we make a choice or a decision.
scarce (Limited). 
The difference between an opportunity cost and a sunk cost is the difference
between money already spent and potential returns not earned on an
investment because the capital was invested elsewhere. 

Marginalism: The process of analyzing the additional or incremental costs or

benefits arising from a choice or decision.
Sunk Costs “Costs that cannot be avoided because they have already been
incurred”.

Efficient market: A market in which profit opportunities are eliminated

almost instantaneously.
The study of economics teaches us a way of thinking and helps us make
decisions.
 B) To Understand Society

Industrial Revolution: The period in England during the late eighteenth and
early nineteenth centuries in which new manufacturing technologies and improved
transportation gave rise to the modern factory system and a massive movement of
the population from the countryside to the cities.
The study of economics is an essential part of the study of society.

C) To Understand Global Affairs

An understanding of economics is essential to an understanding of global
affairs.

D) To Be an Informed Citizen
To be an informed citizen requires a basic understanding of economics.

Q.2) Use any example on the subject of globalization. Ask them to recall ITB (Introduction
to business). Then, ask your students what “made in the U.S.” means. Many will respond
that the good has to be manufactured in the U.S. Raise the issue of where the parts were
made. Quite a few goods that carry the “made in the U.S.” label are actually assembled in the
U.S. with the components manufactured in other countries. Then move on to a discussion of
what it would mean for the U.S. or any developed economy to consume only what we make.
The general answer is higher prices and less choice for consumers, but try to get the students
to focus on specific goods (bananas and BMWs are two that are easy to understand). If you’re
ambitious, you can introduce using value added as a percentage of market value to measure
the extent of local contribution to a final product.

Question: A shirt is stitched together in China using cloth made in Indonesia. The
shirt is shipped to Mexico. A worker in Mexico sews in a label saying “Made in
Mexico” and the shirt is exported to the U.S. under the North American Free Trade
Agreement (NAFTA). The Mexican firm exporting the shirt argues that no tariff
should be applied to this shirt because it was made in Mexico. Discuss the validity of
the exporter’s argument.

ANSWER
The situation is some like broad because it sounds like to bilking with the customers.
Because as the says goes that “customer is always right”, so they should get what they
wanted it to be. As in above example it is clearly briefed that the product ( shirt ) which
the customer will brought will be of accepted wisdom of the Mexican shirt but in
authenticity it the product of China so in my opinion the argument of the Mexican
exporters are not valid because in this way they can sell more illegal or phony products
which disturb the marketing scale of the global.