1. What is the opportunity costs of
Going to the movies instead of cleaning your room
Eating a power bar when you are really hungry even though you know it is going to make your stomach hurt
Fixing your car when instead of going on a vacation
buying a coffee instead of gas

2. Chapter Two
Apply the concept of opportunity cost to any economic choice
Use a Production Possibilities Frontier to demonstrate increasing costs, opportunity cost, economic growth

3. Trade-Offs The choice between alternatives uses of a resource
Two economic tools used to understand trade-offs
Opportunity Cost
Production Possibility Frontier

4. Opportunity Cost
Real economic cost of a good or service produced measured by the value of the sacrificed alternative
As more of a good is produced its opportunity cost rises
“There’s no such thing as a free lunch”

5. Production Possibility Frontier
A PPF illustrates the different maximum output combinations of goods/services than can be obtained from a fixed amount of resources

6. What does a PPF do?
A PPF is a graph shows what the economy can produce with the present resources
If the economy is at a point on the line, then it is making full use of its resources- efficient
If the economy is not using all its resources efficiently then it will be at a point inside the boundary
It is impossible to be at a point outside the PPF unless there is an increase in the factors of production

7. Option: Cars Planes A B C D E
Use a PPF chart to graph the information above

8. 175
150
125
Cars
100 75 50 25 5 10 15 20 25 30
Planes

9. List resources scarce in this situation?
About how many cars can be produced when five planes are made?
About how many planes can be produced when 36 cars are produced?
What is the opportunity cost of producing 150 cars?
What is the opportunity cost of producing 5 planes?

10. Steel, Rubber, Plastic
125 16
25 planes
25 cars