Scarcity, Trade-offs, Cost, and Opportunity Cost In Economics, Society, and Government

Define Economics- Scarcity- Trade offs- Cost- Opportunity Cost-

Constant Opportunity Cost Constant Opportunity Cost Pizza Calzones Pizza PPC 1 10 9 8 7 6 5 4 3 2 1 1 2 3 4 5 6 7 8 9 10 10 5 1 Calzones 1 5 10 The economy foregoes the same amount of one good when producing more of the other. Not realistic for entire economy because different resources are better for the production of specific products. This can represent specific products that use the same resources.

Increasing Opportunity Cost Increasing Opportunity Cost Pizza Computers Pizza A 30 29 24 15 1 2 3 4 30 25 20 15 10 B 5 Computers 1 2 3 4 The value of a foregone product increases as the production of good increases. Specifically relates to the allocation of resources to their best purposes. In this section the best resources at making computers are reallocated to computers and the best at making pizzas stay with pizza A By this point all resources are being allocated to the production of computers, even those resources that least productive at making robots and best at producing pizza.- Common occurrence in Command Economies. B

Can Liberty vs. Authority be viewed in the same manner? “In all governments, there is a perpetual struggle, open or secret, between Authority and Liberty; and neither of them can ever absolutely prevail in the contest. A great sacrifice of liberty must necessarily be made in every government; yet even the authority, which confines liberty, can never, and perhaps ought never, in any constitution, to become quite entire and uncontrollable.” - David Hume “The pursuit of one end necessarily entails opportunity costs in relation to other.” - Isaiah Berlin British Political Theorist

Opportunity Cost of Liberty and Authority No Flag Burning No Anti government speech No questioning of the government No Anti Obama speech (bumper stickers, blogs) 100 80 Liberty-(% not directly impacted) 60 40 20 Authority – actions to increase in government power

Opportunity Cost of Liberty and Authority Beware of the Slippery Slope!!!!! No Flag Burning No Anti government speech public No questioning of the government No Anti Obama bumper stickers or public speech 100 80 Liberty-(% not directly impacted) 60 40 20 Authority – actions to increase in government power

Define Economics- The allocation of scarce resources that have alternative uses. Scarcity- having unlimited wants and needs in a world with limited resources. Trade offs- decision that involves giving up something to gain something else. Cost- The value of a product’s alternative uses. Opportunity Cost- highest value alternative given up. Total Cost= Direct cost (out of pocket) + Opportunity Cost

Constant Opportunity Cost Constant Opportunity Cost Pizza Calzones Pizza PPC 1 10 9 8 7 6 5 4 3 2 1 1 2 3 4 5 6 7 8 9 10 10 5 1 Calzones 1 5 10 The economy foregoes the same amount of one good when producing more of the other. Not realistic for entire economy because different resources are better for the production of specific products. This can represent specific products that use the same resources.

Increasing Opportunity Cost Increasing Opportunity Cost Pizza Robots Pizza A 30 29 24 15 1 2 3 4 30 25 20 15 10 B 5 Robots 1 2 3 4 The value of a foregone product increases as the production of good increases. Specifically relates to the allocation of resources to their best purposes. In this section the best resources at making robots are reallocated to robots and the best at making pizzas stay with pizza A By this point all resources are being allocated to the production of robots, even those resources that least productive at making robots and best at producing pizza.- Common occurrence in Command Economies. B

Opportunity Cost of Liberty and Authority No Flag Burning No Anti government speech No questioning of the government No Anti Obama speech 100 80 Liberty-(% not directly impacted) 60 40 20 Authority – actions to increase in government power

Increasing Opportunity Cost Increasing Opportunity Cost Cupcakes Cupcakes TV’s A 300 290 240 150 1 2 3 4 300 250 200 150 100 B 50 TV’s 1 2 3 4