IGCSE Economics Unit 1 – Choices and Opportunity Costs

Re-cap Questions: 1.What is the Basic Economic Problem? 2.What is the name for a resource which is unlimited? 3.What is the name for a resource that is relatively scarce? 4.What are the four factors of production?

Learning Outcomes Define opportunity cost and analyse particular circumstances to illustrate the concept Evaluate the implications of a particular course of action in terms of opportunity cost.

Starter – Sweet Choices

Opportunity Costs Any time we have to make a choice……. The alternatives we don’t chose are seen as a cost Opportunity Cost refers to the next best alternative foregone when a decision is made

Why might we have to make a choice?

People, businesses and governments only have a limited amount of money but have many needs and wants to satisfy $100 Food? Entertainment? Clothing? Defence? Health care? Roads? $100bn Choice What might a small business spend $20,000 on?

Your opportunity costs… Write a list of 5 decisions that you have made recently For each state the opportunity cost of this decision. (Remember….. Your limited resource could be time, money, materials etc)

What other alternatives are there for this land?

What alternatives could the following resources be used to produce?

What could the opportunity cost be of……. Eating pizza for dinner Buying an IPad Going to university Choosing to become a teacher Going on holiday to Vietnam Spending the evening watching TV Choosing to study Economics at iGCSE The government building a new school Saving 10,000 Php

Lets get Graphical….. Imagine you have 5 hours of your evening. You have to choose how long to spend playing on Xbox and how much to spend on your homework. How can we graph this? Hours Xbox Hours Homework

Conflicts of Interest Sometimes when decisions are made the needs/wants of certain groups are satisfied where as others are not. This is known as a ‘conflict of Interest’ These groups are sometimes referred to as ‘Stakeholders’

Example….. Which stakeholder groups will be happy and which will be unhappy if the government decides to build a new motorway?

Task Text book page 17 Article 1 Why is HP spending $1billion on automating services for customers Who are the winners and losers in this situation? Article 2 How does the article illustrate opportunity cost? Who would be the winners and losers if the government decides not to raise taxes?