Warm Up (YOU WILL TURN THIS IN!) How are scarcity, shortage, choice, factors of production, and trade-offs connected?

Tuesday, September 1, 2015 Objective: Students will be able to explain the concept of opportunity costs. Purpose: Opportunity cost is one of the things we need to consider before making economic decisions.

Trade Offs Trade-offs: alternatives that we sacrifice when we make a decision Each decision we make involves trade-offs The decisions that businesspeople make about how to use land, labor, and capital resources also create trade-offs

Trade-Offs Society and Trade-offs: Countries also make decisions that involve trade-offs. Economists simplify their explanations of the trade-offs countries face by using the example of guns and butter. In short, the more butter that a country produces, the fewer guns that the country can produce. This also works vice-versa.

Opportunity Cost Usually one alternative is more desirable for a country/business/individual than another. The MOST DESIRABLE alternative given up as the result of a decision is called the Opportunity Cost.

Opportunity Cost If I gave you a choice between these four candy bars… A B C D Which one would you choose? Which one (s) would be your opportunity costs?