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    For those who are doing this exam, which is in three days, please feel free to post here! You can do an essay or a data question here, then maybe we can have a look and see how it can be improved...or something on the lines of this. Ofcourse you can ask other questions which youre uncertain about...etc
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    Yes, how do I write more than 4 lines for each point for and against an argument?

    And how on earth can we answer this housing question that came up in Jan 04:

    Explain how oppurtunity costs can affect thhe housing market.

    THis was 8 marks... what a totally dumb question? Oppurtunity cost is a defenition, a way of measuing losses in real terms I think, so it doesn't affect the housing market, it's just used to analyse it!

    So annoying... 8 marks for such a stupid question..
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    (Original post by mik1a)
    Yes, how do I write more than 4 lines for each point for and against an argument?

    And how on earth can we answer this housing question that came up in Jan 04:

    Explain how oppurtunity costs can affect thhe housing market.

    THis was 8 marks... what a totally dumb question? Oppurtunity cost is a defenition, a way of measuing losses in real terms I think, so it doesn't affect the housing market, it's just used to analyse it!

    So annoying... 8 marks for such a stupid question..
    hmm weird one, maybe as house prices increase, the opportunity cost of buying a house increases...and vice versa....something along these lines? then you can talk about negative equity...etc.
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    They're referring to housing as a form of investment here. The most obvious opportunity cost is investing in shares. It is often helpful to refer to recent FTSE performance, and how this would have affected the opportunity cost of housing.
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    (Original post by mik1a)
    Yes, how do I write more than 4 lines for each point for and against an argument?

    And how on earth can we answer this housing question that came up in Jan 04:

    Explain how oppurtunity costs can affect thhe housing market.

    THis was 8 marks... what a totally dumb question? Oppurtunity cost is a defenition, a way of measuing losses in real terms I think, so it doesn't affect the housing market, it's just used to analyse it!

    So annoying... 8 marks for such a stupid question..
    opportunity cost is the price of forgoing one gain in preferance to another. During a recession, the opportunity cost of buying a house, for example, is less savings in times of increased uncertainty.

    Presumably during a recession, your wages fall and more people are unemployed, the the opportunity cost of purchasing a house is greater (less discretionary income, money needs to be spent on other goods rather than a house). This is why the housing market suffers during a recession.
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    Actually waht the hell is oppurtunity cost??

    If you chose to buy a pen instead of a pencil, the oppurtunity cost is what? The cost of the pencil, or the difference in the price between them?
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    (Original post by savvy10)
    They're referring to housing as a form of investment here. The most obvious opportunity cost is investing in shares. It is often helpful to refer to recent FTSE performance, and how this would have affected the opportunity cost of housing.
    so the opportunity cost is money foregone, which couldve been used in ninvesting shares right?
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    (Original post by mik1a)
    Actually waht the hell is oppurtunity cost??

    If you chose to buy a pen instead of a pencil, the oppurtunity cost is what? The cost of the pencil, or the difference in the price between them?
    In your situation the opportunity cost is the pencil
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    But if the pen becomes more expensive, the oppurtunity cost gets larger doesn't it? However the pencil's price stays the same.

    On the other hand, if the pencil becomes cheaper, the oppurtunity cost becomes smaller.

    Contradiction or waht.. you see why I'm confused..
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    (Original post by Mysticmin)
    In your situation the opportunity cost is the pencil
    is that the only opportunity cost?
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    (Original post by mik1a)
    But if the pen becomes more expensive, the oppurtunity cost gets larger doesn't it? However the pencil's price stays the same.

    On the other hand, if the pencil becomes cheaper, the oppurtunity cost becomes smaller.

    Contradiction or waht.. you see why I'm confused..
    If you can only buy the pen or the pencil, then the opportunity cost of buying the pen is the pencil, no matter what the price.

    If you had a choice of going to spain on holiday or the carribean, and you go to the carribean, the opportunity cost is the holiday to spain. Not the cost of the holiday to spain.
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    (Original post by TheWolf)
    is that the only opportunity cost?
    That is the direct opportunity cost, you are forgoing the pencil. Of course you could link into into other things like he's forgoing drawing sketches of the eiffel tower but I don't think that's necessary
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    No, there are is a huge number of other goods you could have purchased as well. The main opportunity cost here though is other investment products. Shares are the prime example, and easy to do. You can also talk about redcued consumption spending as well, but you want to focus on substitute goods or services foregone.
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    (Original post by Mysticmin)
    If you can only buy the pen or the pencil, then the opportunity cost of buying the pen is the pencil, no matter what the price.

    If you had a choice of going to spain on holiday or the carribean, and you go to the carribean, the opportunity cost is the holiday to spain. Not the cost of the holiday to spain.
    So the oppurtunity cost as actually not a cost... it's just defined as the next best alternative that you sacrifice... not the price of it, or the benefit you give up..

    Thanks, this is beginning to make sense, but I've sure I saw a MCQ where we had to say the oppurtinuty cost of an increase in x was the change in y produced on a PPC.

    So If I chose the holiday to spain, the oppurtunity cost is the holiday to the carribean? What fool called it a cost then? :confused:
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    (Original post by mik1a)
    So the oppurtunity cost as actually not a cost... it's just defined as the next best alternative that you sacrifice... not the price of it, or the benefit you give up..

    Thanks, this is beginning to make sense, but I've sure I saw a MCQ where we had to say the oppurtinuty cost of an increase in x was the change in y produced on a PPC.

    So If I chose the holiday to spain, the oppurtunity cost is the holiday to the carribean? What fool called it a cost then? :confused:
    That's nearly the textbook definition - the next best alternative forgone! lol, no idea, he might prefer boozing in pseudo british spain.
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    (Original post by savvy10)
    No, there are is a huge number of other goods you could have purchased as well. The main opportunity cost here though is other investment products. Shares are the prime example, and easy to do. You can also talk about redcued consumption spending as well, but you want to focus on substitute goods or services foregone.
    huh why reduce consumption spending? after buying houses leads to more consumption through buying goods such as carpet and kitchen...etc + equity withdrawal leads to increase in C?
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    (Original post by TheWolf)
    huh why reduce consumption spending? after buying houses leads to more consumption through buying goods such as carpet and kitchen...etc + equity withdrawal leads to increase in C?
    buying houses reduces your monthly income, through mortgages, so you have less to spend on other consumer goods. It decreases your discretionary income (income after taxes, bills etc). With the exception of goods listed under autonomous expenditure, most goods are income elastic.

    the evaluation point is that the housing market during a boom also causes a wealth effect, causing people to spend more. An example is the increase in UK personal debt, people borrow against the value of their house because they feel richer.
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    OK quick housing market revision:

    How house prices affect the economy:
    - goods that are on the price index used to measure inflation, such as estate agents, DIY products, and mortgages also rise in price with a house price rise.
    - the wealth effect and boosts in consumer confidence, two factors of consumer spending can be changed by variations in house prices - if house prices rise, people withdray equity, have good consumer confidence and spend lots.
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    Yes, I specifically meant reduced retail expenditure, sorry if that was unclear.
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    (Original post by mik1a)
    OK quick housing market revision:

    How house prices affect the economy:
    - goods that are on the price index used to measure inflation, such as estate agents, DIY products, and mortgages also rise in price with a house price rise.
    - the wealth effect and boosts in consumer confidence, two factors of consumer spending can be changed by variations in house prices - if house prices rise, people withdray equity, have good consumer confidence and spend lots.
    yup, inflation is measured using RPI-X, the (-X) relates to the mortgage rates being taken out. Although now the UK is switching to the consumer price index, which has a totally different scale...
 
 
 
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