CHOICES 1-2

Objective Analyze trade-offs and opportunity costs

Resources are Scarce

Trade-Offs: alternative choices Opportunity Cost: the cost of the next best alternative (time, $ or resource) --what you have given up or lost Cost-Benefit Analysis: The benefit should outweigh the cost Production Possibilities Frontier Graph on projector

Opportunity Cost Example: 1. The opportunity cost of moving from a to b is… 2 Bikes 2.The opportunity cost of moving from b to d is… 7 Bikes 3.The opportunity cost of moving from d to b is… 4 Computers 4.The opportunity cost of moving from f to c is… 0 Computers 5.What can you say about point G? Unattainable

Chapter 1 Review

The chapter 1 test is on Tuesday!! 1. Draw and label one PPF that shows the following: A =efficient B=overheated C=unattainable D=inefficient 2. Draw and label another PPF that compares these years: GDP Unemployment A. 1960 3 5% B. 1961 5 4% C. 1962 2 10% 3. Label and draw circular flow. 4. Page 33 # 2, 4, 5, 9, 10, 13, 14 and 15 The chapter 1 test is on Tuesday!!