OPPORTUNITY COSTS & INDIVIDUALS’ PREFERENCES practice

QUESTIONS TO LEARN Economic choice and opportunity costs Individuals’ needs preferences

Exercise 1.1 solution

EXERCISE 2

Exercise 1.2 solution

Exercise 1.2 solution

HOMEWORK At next lesson you are to make a presentation (4-5 slides) in such themes (everybody choose his/her own theme) : To define what is the production possibility frontier To show the role of PPF in economic growth theory To explain the PPF and innovations correlation To explain the PPF and environmental pollution

To define what is the production possibility frontier The Production Possibility Frontier (PPF) shows the combination of goods that an economic system is capable of producing given the limited resources available to it at a specific time period with all its resources fully and efficiently used. At IB level, the PPF is usually 2 dimensional like the image below.

To show the role of PPF in economic growth theory

To explain the PPF and innovations correlation

To explain the PPF and environmental pollution People pollute because it is the cheapest way they have of solving a certain very practical problem. How to dispose of the waste products remaining after production and consumption of a good??? Dying Aral Sea (Middle Asia’ Melioration Program results)

To explain the PPF and environmental pollution Catastrophe at Caribbean Sea(British Petroleum Deepwater Horizon oil spill disaster at Gulf of Mexico in April 20 – September 19 2010)

HOMEWORK 1. To make a table of effects changing the consumer equilibrium for: normal good (luxury & necessity); inferior good. 2. To make a table of consumers’ behavior for effects (definitions + examples): - bandwagon snob Veblen

To make a table of effects changing the consumer equilibrium for: normal good (luxury & necessity); inferior good. Income effect attributes how a change in the consumer’s income influences his total satisfaction Substitution effect describes a change in consumption patterns due to a change in the relative prices of goods Price effect consists of the substitution effect and the income effect

To make a table of consumers’ behavior for effects (definitions + examples): - bandwagon snob Veblen

CONSUMERS’ DEMAND TYPES CONSUMER DEMAND FUNCTIONAL NON-FUNCTIONAL SOCIAL SPECULATORY IRRATIONAL VEBLEN EFFECT BANDWAGON EFFECT SNOB EFFECT

UNDERSTANDING TEST Look at the picture and tell about the effect(s) of consumer choice/type of consumer demand producers (sellers) are manipulating

UNDERSTANDING TEST Look at the picture and tell about the effect(s) of consumer choice/type of consumer demand producers (sellers) are manipulating

UNDERSTANDING TEST Look at the picture and tell about the effect(s) of consumer choice/type of consumer demand producers (sellers) are manipulating

UNDERSTANDING TEST Look at the picture and tell about the effect(s) of consumer choice/type of consumer demand producers (sellers) are manipulating

UNDERSTANDING TEST Look at the picture and tell about the effect(s) of consumer choice/type of consumer demand producers (sellers) are manipulating