Chapter 1.2 Opportunity Costs

Tell me 5 vacation destinations you would like to go to...(place them in order of which you prefer) What are you giving up by choosing your top choice? WARM-UP

All of the ___________that we give up whenever we choose one course of action over another. Tell me 3 Trade-offs that you made in order to come to school today… Trade - Offs alternatives

Military v. ______________ –RESOURCES ARE ________LIMITED –Steel to make a _____ – now can not be used to build ________equipment to make butter. Guns v. Butter Consumer Goods ALWAYS tank dairy

The _______ desirable alternative given up as a result of a decision –If I buy a computer, then I can not use that money to go on a vacation… –Should I sleep late or wake up early for a ski trip? –Sleep late or wake up early to take a test? –Sleep late or wake up early to go to practice? Opportunity Cost MOST

Global Connections  The same decision made in two different countries can have vastly different opportunity costs. Malaysia bought two warships in 1992, paying a price equal to the cost of providing safe drinking water for the 5 million Malaysians lacking it. In other words, the opportunity cost of the warships was safe drinking water. The opportunity cost of building warships in wealthier countries is not nearly so high. However, there are still costs to consider. In the US, the number of people employed by the military decreased dramatically following the end of the cold war. In response, the Pentagon developed a new program, “troops to teachers,’ to help former soldiers get jobs teaching in schools. The switch from army duty to teaching reminds us that the opportunity cost of a soldier may be a teacher and vice versa.

Ch 1.3 Production Possibilities Curves

Production Possibilities A production possibilities curve, or______, shows __________ ways to use an economy’s resources. The axis of the graph can show categories of ___________________, such as farm goods and factory goods or capital and consumer goods.graph alternative goods and services

Drawing a PP Curve First an economist decides which _____________________ to examine. The line drawn for the ____ goods and the ___________ of those goods is the production possibilities_________. This line represents a point at which the ___________ combination of two products/resource is being produced. goods or services two combinations frontier maximum

Watermelons v. Shoes Food v. Computers

Lets Graph Butter 0 80K 100K 120K 130K Guns 80K 60K 40K 20K 0K Fish43210 Coconuts02468

Efficiency, Growth, and Cost PP graphs can show how efficient an ________ is, whether an economy has grown or shrunk, and the _________________of a decision. economy opportunity cost

Efficiency means using resources in such a way as to maximize the production or output of goods and services. Any point inside the line indicates an underutilization of resources than the economy is capable of using.

A production possibilities curve reflects the country’s _________production possibilities as if the country’s resources were ________in time. However, quantity of resources a country has is__________________. If the quantity or quality of available land, labor, or capital changes, then the pp curve will______. New ___________, immigration can help with growth. When the economy ______ economists say that the entire production possibilities curve has “_______to the right.” And if a country’s population ages, becomes __________ or less educated, then the curve would shift to the____. current frozen constantly changing inventions move grows shifted unhealthy left

Resources and Technology A country’s ________include its land and natural resources, its _____ force, and its physical and human capital. Both _______ and physical capital reflect a vital ingredient – technology. Countries have different ways to produce items, each using different technology, or know-how. Economist asses each country’s level of technology, and resources which determine its _______. resources work human technology ppc

Tropical ____ forests are areas of thick vegetation found in equatorial altitudes around the world. These forests contain an enormous diversity of _____ and animal life. Most rain forest areas, such as the Amazon Basin, are part of _________ countries. In many cases these nations hope to ______ the land for economic growth. Groups that want to protect and preserve the environment, however, point to the ecological hazards of clearing this land and developing it for settlement or for _________uses, such as mining.rain plant Developing exploit commercial

Illustrate the impact of each event on a PPC –The computer is invented –1 million farm workers remain unemployed for 6 months –A drought

Buying a car Safety at any cost When you buy a car there are trade-offs. Economists urge consumers to consider the trade-offs and opportunity costs of each of their purchase decisions. For cars they fall into: Safety vs. cost and convenience Pollution v. size Safety v. personal freedom Choose the right car for your group…chart out the 3 opportunity costs & trade-offs for each vehicle.