How do you make decisions? What is a decision you made recently? Bell Ringer How do you make decisions? What is a decision you made recently? What does opportunity mean?

ECON1.1: Explain that the practice of economic decision making is an evaluation process that measures additional benefits versus additional costs. How to make decisions

What is Economics? Economics: is the study of how people seek to satisfy their needs and wants by making choices.

What is the cost of making a decision? Once you make a decision between buying Talenti gelato or Breyers ice cream you are essentially giving up one option for the other. This is called a trade off.

Do Governments have to make trade-offs? The guns or butter debate: This term refers to the struggle that governments face when deciding how to spend their money. Should they spend it at home on education, on the environment, ect. Or of they should spend the money on the military defending their country.

Opportunity Cost Opportunity Cost: This is the most desirable alternative somebody gives up as a result of a decision What is the opportunity cost for the following: Sleep late or study for a test? Sleep late or wake up early to eat breakfast? Sleep late or wake up early to go on a ski/snowboarding trip?

Decision making grid

Make your own Find a partner sitting near you and make your own decision making grid. You have 5 minutes, be prepared to share. Alternatives Option 1 Option 2 Benefits Benefits forgone Opportunity Cost

Thinking at the margin Thinking at the Margin: This is how economists decide how much or how little of something to do. Do you study for 2 hours and then go to a party for the next 4 hours the day before you take a final at school? Thinking like the example above is thinking at the margin.

Marginal Cost vs benefit This is the extra cost of adding one unit So adding an hour of study time means 3 hours at the party This is the extra benefit of adding one more unit If you add an hour of study time your grade on the test is likely to be higher