DO NOW: Copy the graph below and fill in the blanks A PPF graph measures ______________ PPF stands for :_________________. On this graph the cost of producing a mango is _____________ 60 A * ____________________ * C 50 B a n a n a s 40 ____________________ 30 B * 20 * D 10 ____________________ 12 24 36 48 60 72 M a n g o e s

Macroeconomics: The study of economics in terms of whole systems including general levels of output and income and the interrelations among sectors of the economy. EXAMPLES: The growth of the textile industry. The relationship between unemployment and credit card debt. The collapse of the housing market

Microeconomics: The study of the economic decisions and actions of individual people and companies. EXAMPLES: What incentives will work for the employees of the United Sprocket Co. College major choices and employment of students from Archimedes Academy. Heating costs for Mr. Brent if he changes to oil heat.

The Seven Principles of Economics If a shoe salesman sells more shoes because he has been promised a raise, it could be considered an example of the economic principle... People respond to incentives

The Seven Principles of Economics If a person decided to stop eating out because his paycheck was short this week this could be considered an example of... Rational people think at the margin.

The Seven Principles of Economics If a man agrees to help take care of his neighbor’s yard work in exchange for his neighbor who is an accountant helping with his taxes this could be considered an example of... Trade can make everyone better off.

The Seven Principles of Economics Trying to save money, a person buys some cheap used tires two months later a tire blows and he has an accident this could be considered an example of... Future consequences count.

The Seven Principles of Economics There are two movies you really want to see before they leave the theatre tomorrow, “Snatchers of the Invasion Bodies” and “Ring of the Lords”. You can, of course, only see one. This is an example of… Scarcity forces tradeoffs.

The Seven Principles of Economics Every Saturday morning farmers bring their fruits and vegetables to the town square to sell them. The townspeople get good values for their money and the farmers make a lot of money selling their produce. This is a good example of… Markets are usually a good way to organize economic activity.

The Seven Principles of Economics A student stays home and studies for a big test instead of spending time playing his new video game. This is and example of … Scarcity forces tradeoffs

You have $20. You have a choice of buying one of the following You have $20. You have a choice of buying one of the following. The things below are listed in your order of preference: A hat $18 A CD $12 Fast food $17 A book $15 What is the “Opportunity Cost”? The Opportunity Cost is the cost of your second choice. Therefore the correct answer is $12 for the CD.