Economic Choices and Decision Making Chapter 1 Section 3

Trade Offs and Opportunity Cost… Trade Offs are alternative choices, we trade one thing for another. Happens with every economic decision. This can be helped by a decision making grid (pg. 20) Every time we choose to buy one thing, we choose not to buy another. This is also known as Opportunity Cost

Opportunity Cost The cost of the next best alternative use of money, time or resources when one choice is made over another. If we buy a TV, we may miss out on other things in our lives: new clothes, new music, etc… I choose to work rather than to stay home. What is the opportunity cost?

Making an economic decision involves recognizing and evaluating the cost of alternatives as well as choosing from the alternatives. You do this whether you know it or not.

Production Possibilities Frontier… Represents what can be produced between choices when a country is using its resources to the best of its ability. No idle resources (they cost money)

Guns vs. Butter

Assignment Define the 6 Key Terms on Page 19. Leave this in your notebook. I will check them when I check your notebooks. HOMEWORK!!!!! Read page 27 over the weekend. It is a short review of what we have been talking about.