Opportunity Cost Chapter 1.3.

Slides:



Advertisements
Similar presentations
6-1 Chapter 6: Code Switching and Language Loss ©2012 California Department of Education, Child Development Division with WestEd Center for Child & Family.
Advertisements

Sunk Costs Revisited Sunk cost is one incurred in the past that can not be changed by current or future actions. So, it is not an economic cost - not an.
Opportunity cost. Warm up?  List several activities you enjoy, such as reading, watching T.V., playing football, listening to your favorite music, etc.
Capital Budgeting Net Present Value Rule Payback Period Rule
Thursday Please get out your Key Terms (7-15)
2 Some Tools of Economic Analysis  What is opportunity cost?  What questions must every economy answer?  What are the different economic systems that.
OPPORTUNITY COSTS. People’s choices involve costs Use of scarce resources can be costly so tradeoffs must be made Opportunity Cost – the highest value.
Chapter 2 Economic Tools and Economic Systems These slides supplement the textbook, but should not replace reading the textbook.
Chapter 1 Scarcity, Opportunity Cost, & Marginal thinking.
What is Economics? 1.What is Economics? 2.Economic Systems and Economic Tools 3.U.S. Private and Public Sectors.
Opportunity Cost The next best alternative.. Marginal Analysis A decision-making tool for comparing the additional or marginal benefits of a course of.
1 1.3 Opportunity Cost and Choice. 2 Opportunity Cost Overview: Because of ____________, whenever you make a choice you must pass up another opportunity.
CHAPTER 1 What Is Economics?
Econ Essentials #3 Opportunity Cost. Opportunity Cost Objectives 1.To explain basic economic questions. 2.To define opportunity cost. 3.To estimate opportunity.
Opportunity Cost Chapter 1.3. Warm-Up In this clip from the movie, Along Came Polly, what does Reuben (Ben Stiller) lose by putting on and taking off.
1 1.3 Opportunity Cost and Choice. 2 Opportunity Cost 1.Overview: Because of scarcity, whenever you make a choice you must pass up another opportunity.
THE GUIDE TO ECONOMIC THINKING
LESSON 1.1 The Economic Problem
LESSON 1.1 The Economic Problem Recognize the economic problem, and explain why it makes choice necessary. Identify productive resources, and list examples.
What Is Economics? The Economic Problem Economic Theory Opportunity Cost and Choice CHAPTER 1.
Learning Objective: Today I will be able to use common economic terms/concepts by trading off scarce items to define opportunity cost. Agenda: 1)Learning.
Humanity at its’ finest. Unit I: Economics Basics and Market Types Lesson III.
© 2010 South-Western, Cengage Learning SLIDE 1 Chapter 11 Lesson 11.1 Making Better Decisions Learning Objectives LO 1-1 Apply the decision-making process.
Chapter 9 Learning Objectives
Introduction to Microeconomics Class 2
Chapter 2 ECON4 William A. McEachern
Unit 1: Basic Economic Concepts
Bell Work: What are a couple of things that affect the economy?
Other Activities/Ideas:
© 2012 Cengage Learning. All Rights Reserved
Relevant Costs for Decision Making
The Basic Problem in Economics
What Is Economics? CHAPTER The Economic Problem
1.3 Opportunity Cost and Choice
The Basic Problem in Economics
Scarcity Choices Tradeoffs and Opportunity Cost
Chapter 1 : INTRODUCTION TO ECONOMICS Prepared by : Dr.Hassan Sweillam
KRUGMAN’S Economics for AP® S E C O N D E D I T I O N.
8/25 Class Objective You will gain an understanding of the terms economics, resources, scarcity, and opportunity cost. You will also read a portion of.
Trade-offs Chapter 1 Section 2.
ECONOMICS YOU CAN’T ALWAYS GET WHAT YOU WANT…
Economics The study of decision-making and the use of limited resources in an attempt to fulfill unlimited wants.
What Is Economics? CHAPTER The Economic Problem
AP Economics “Econ, Econ” Econ.
New Key Terms Trade offs: All the possible choices or options sacrificed when a choice is made Opportunity Cost: The next best alternative sacrificed.
What is Economics.
Bellringer – use pencil
Relevant Costs Definition of relevant costs Sunk cost
AP Economics “Econ, Econ” Econ.
There is no such thing as a free lunch
AP Economics “Econ, Econ” Econ.
What is Economics Chapter 1.
The Basic Problem in Economics
How do economic conditions affect financial decisions?
Hypothesis Testing.
Warm-Up Estimate the per night price of staying in both of these hotels. What made you guess these prices?
Characteristics of the Ideal Classroom
Chapter 1: What is Economics? Section 2
The Basic Problem in Economics
Econ Essentials #6 Scarcity.
Chapter 9. Recover the potentially lost customer
Economic Problems 4/18/2019.
Econ Essentials #6 Scarcity.
AP Economics “Econ, Econ” Econ.
Scarcity and the Factors of Production
Economics: Trade-Offs and Choice
The Basic Problem in Economics
Trade-offs and Opportunity Costs
Economics: Chapter 3 Your role as a Consumer.
Relevant Costs for Decision Making
Presentation transcript:

Opportunity Cost Chapter 1.3

Warm-Up In this clip from the movie, Along Came Polly, what does Reuben (Ben Stiller) lose by putting on and taking off his pillows every morning and evening?

Reading Quiz 1.3 Define Opportunity Cost True or False: opportunity cost varies What is sunk cost? List one opportunity cost of going to college.

Opportunity Cost Class notes (right)

Opportunity Cost The Opportunity Cost of the chosen item or activity is the value of the best alternative you must pass up. We ALWAYS choose what we do or buy because it is the most preferable at the time. Simulation

Estimate Opportunity Cost Opportunity cost is an estimate: we never really know the real value of next best alternative, only what is expected.

Opportunity Cost Varies Opportunity cost depends on the value of the alternatives!

Do we REALLY calculate O.C.? We estimate the opportunity cost based on rational self-interest. We don’t necessarily calculate value of all possible alternatives. Information may be limited/faulty Decisions may lead to lost opportunities and regret

Time = Scarce OR

Sunk Cost Sunk Cost: a PAST cost that you have already acquired and cannot recover Sunk costs must be ignored when making economic decisions “No point in crying over spilled milk”