Unit 6 Opportunity Cost

A University Education and Opportunity Cost

Unlike most costs discussed in economics, an opportunity cost isn’t always a number. The opportunity cost of any action is simply the next best alternative to that action. Economists believe that opportunity costs play a fundamental role in people’s lives. For example, many school-leavers consider going to Universities for four or five years after finishing schools. What is the cost of acquiring a University education?

Obviously, the cost of tuition, the cost of books and other supplies, and the cost of living in a hostel represent the money cost of going to University. The other uses of this money might have been put to represent its opportunity costs. But what else is a cost of going to University? If a student didn’t go to University, then he or she would most likely find a job instead.

The money that those who choose University might have earned during their years of study is described by economists as foregone earnings. Foregone earnings represent another, very important cost of a University education.

Thus, the opportunity cost of going to University is the goods and services represented by the money cost of the education, plus the value of the foregone earnings.

Notes:

tuition – обучение

foregone earnings – упущенные заработки

Unit 7 Money

The System of Cheques in Britain

Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. So, bank-notes and coins are not the most important form of money in developed economies.

In the United Kingdom about 90% of all transactions are settled by means of cheques. But cheques themselves are not money; they are orders to bankers to transfer money from one person to another. The money transferred in this way consists of bank deposits. If there is no money in the form of a bank deposit then any cheques drawn on that account will be worthless.

Cheques were used as early as the second half of the 17^th century, but they did not come into general use until the second half of the 19^th century. The Bank Charter Act of 1844 put strict limitations on the note issue at a time when the output of goods and services was expanding rapidly. The need for an expansion of the money supply to keep pace with increasing output greatly stimulated the use of bank deposits.

This most developed form of money (bank deposit) consists of entries in the bank ledgers, or more likely nowadays, of records on computer tapes. The greater part, in value terms, of the payments made each day are carried out by adjustments made to the totals in different bank deposits. A payment from one person to another merely requires that the banker reduces the amount in one deposit and increases in another. Transferring money, therefore, has become little more than a kind of bookkeeping exercise, the money itself does not consist of some physical tangible commodity.

Notes:

to transfer – переводить (о деньгах)

to come into use – начинать употребляться

to keep pace with – не отставать от

entry – запись

ledger – главная книга (в бухгалтерии)

bookkeeping – бухгалтерия