1.Analyze trade- offs & opportunity costs. 2.Explain the reasons for studying economics.

trade-off opportunity cost production possibilities frontier cost-benefit analysis

Because resources are scarce, consumers must make wise choices Trade-offs – alternative choices Opportunity Cost – the cost of the next best alternative (time, $, or resources) –What you give up Production Possibilities Frontier – diagrams various combinations of goods & services an economy can produce when all productive resources are fully employed (graphs p. 23)

Matt has 2 choices for a summer job. The 1 st opportunity is at a computer manufacturer, where he would earn $10.25 an hour. The 2 nd is with a landscaping company, where he could work & have lunch with 3 of his closest friends every day. That job would pay $8.65 an hour. For one 40-hour workweek, what would be the opportunity cost, in dollars, of accepting the landscaping job? What would be the opportunity cost of accepting the manufacturing job?

Cost-Benefit Analysis Cost-Benefit Analysis: The benefit should outweigh the cost Economics for Citizenship Economics for Citizenship : Studying economics will make not tell you what decisions to make, but it will help you become a better decision- maker