ECONOMIC CHOICES AND DECISION MAKING

ECONOMICS AGENDA: TUESDAY JANUARY 31, 2017 Learning Objective: Understand the decision making grid and opportunity cost Standard: 12.1 Students understand common economic terms and concepts and economic reasoning. Warm up question The decision making grid and opportunity Practice activities Closure question ECONOMICS TEST: FRIDAY FEBRUARY 3 UNIT 1

WARM UP: JANUARY 31, 2017 Give three reasons why it can be difficult to make decisions about what to buy at a clothing store.

Trades-Offs These are alternative choices to make an economic decision A decision making grid is how to analyze an economic problem Forces you to consider relevant alternatives Requires you to evaluate each alternative based on the criteria you selected

Opportunity Cost Economists see costs as more than a price tag placed on a good or service This is the cost of the next best alternative use of money, time or resources Time has an opportunity cost Part of making economic decisions involves recognizing and evaluating the cost of the alternatives as well as making choices from among the alternatives

My Decision Making Grid (p.20 example) Cost less than $100 Durable? Will parents approve? Future expense necessary? Can use any time? 1. 2. 3. 4. 5.

Opportunity Costs CHOICE ONE WITH $100 CHOICE TWO WITH $100

Closure Question What have you learned today about trade-offs and opportunity cost?

WARM UP QUESTION: WEDNESDAY FEBRUARY 1, 2017 Peter has two choices for a summer job. Choice one is at a computer manufacturer. He would earn $15 per hour. Choice two is with a landscaping company where he could work and have lunch with his three best friend. This job would pay $10 per hour. What would be the opportunity cost of accepting the job with the computer manufacturer? What choice would you make if you were Peter?

NEWSPAPER ARTICLE QUESTIONS Read the newspaper article carefully. Explain in a paragraph what the article is about. Does the article relate to making economic choices? Provide examples. What did you learn about the economy from reading this article?

Closure Question How did reading the newspaper article give your a better understanding of the economy?

WARM UP QUESTION: WEDNESDAY FEBRUARY 2, 2017 During World War II, the American economy temporarily produced beyond it production possibilities frontier. How do you think it was possible for this to happen?

Building Economic Models Economists study how people satisfy unlimited and competing wants with the use of scarce resources They are concerned with strategies that will help us make the best choices A model is a simplified theory or picture of what something is like or how it works Models reduce complex situations to their most basic elements

The Circular Flow Diagram

Production Possibilities Frontier This illustrates trade-offs and opportunity costs

Models are based on assumptions Models can be revised Economic Models Models are based on assumptions Models can be revised Used to understand the past, present or future Model can be corrected if need be

Cost-benefit analysis This compares the costs of an action to the benefits received Businesses make investment decisions by investing in which give the highest return per dollar spent If you like both A and B, but B costs less, it would be better to choose B because you get more satisfaction per dollar spent

Answer questions 1-7 on page 25 Classwork/Homework Answer questions 1-7 on page 25