How to calculate opportunity costs:

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Presentation transcript:

How to calculate opportunity costs: Point Cupcakes Brownies A 10 B 5 C 20 10 5 What is the opportunity cost of moving from Point A to B in Brownie production? 1. Calculate the difference To go from A to B, you give up 5 cupcakes, and gain 10 brownies.

How to calculate opportunity costs: Point Cupcakes Brownies A 10 B 5 C 20 10 5 What is the opportunity cost of moving from Point A to B in Brownie production? 5 cupcakes 2. Write the sentence: 10 5 The opportunity cost of ______ Brownies is ______ Cupcakes 3. Answer the original question

How to calculate opportunity costs: Point Cupcakes Brownies A 10 B 5 C 20 10 20 What is the opportunity cost of producing 10 cupcakes? 20 Brownies Steps to answer this question: 1. Calculate the difference: To make 10 cupcakes you give up 20 brownies 2. Write the sentence: The opportunity cost of 10 cupcakes is 20 brownies 3. Answer the original question:

Point Cellphones TV’s A 25 B 20 5 C 12 9 D 8 18 E 4 24 F 35 1.What is the opportunity cost of producing 18 TV’s? 2. What is the opportunity cost of producing 20 Cellphones? 3. What is the opportunity cost of moving from point C to point E? 17 cellphones (25-8=17) 30 TV’s (35-5=30) The opportunity cost of 15 TV’s is 8 cellphones