Bell Work: What are a couple of things that affect the economy? Trade-Offs Bell Work: What are a couple of things that affect the economy?

Trade-Offs The economic choices people make involve exchanging one good or service for another. If you choose to buy an iPhone, you are exchanging your money for the right to own the iPhone. Exchanging one thing for the right to own another is called a trade-off.

The Cost of Trade-Offs The result of a trade-off is what you give up in order to get something else. Example: Time is a scarce resource – there are only so many hours in a day– so you must choose how to use them (When you decide to study economics for an hour tonight, you are giving up any other activities you could have chosen to do during that time) Opportunity Cost- the value of the next best alternative that had to be given up to do the action that was chosen

Trade-Offs A good way to think about opportunity costs is to realize that when you make a trade-off (and you always make trade-offs), you lose. What do you lose? You lose the ability to engage in your next highest valued alternative. In economics, an opportunity cost is always an opportunity that is given up.

Trade-Offs Businesses must consider trade-offs and opportunity costs when they choose to invest or hire workers to produce one good rather than another. Consider this on a national level: Congress just voted for an almost 1 trillion dollar universal health care bill. That’s 1 trillion dollars that they cannot spend on something else (maybe education???)

Trade-Offs On your own, write down 3 trade-offs you have made in the last month. (Only one can be money in exchange for something else) What was the opportunity costs? Was it worth it in the end? Compare your trade-offs & opportunity costs with your partner. Let’s hear some of your trade-offs/opportunity costs.

Current Trade-Offs In a group of no more than 3, come up with current events topics that have had some type of trade-off involved. Was it a group or individual that made the decision? The opportunity costs ($, Land, etc) The economic benefits expected. Your groups will present these at the beginning of class tomorrow!