1. Chapter 1: What is Economics? Section 2

2. Objectives Explain why every decision involves trade-offs.
Summarize the concept of opportunity cost.
Describe how people make decisions by thinking at the margin.

3. Introduction Opportunity Cost
*Every time we choose to do something we are giving up the opportunity to do something less.
The most desirable alternative somebody gives up as a result of a decision is the opportunity cost.

4. Trade-offs
Everyone makes decisions that involve trade-offs.

5. Businesses and Governments
Businesses make trade-offs when they decide how to use their factors of production.
Government-

6. Opportunity Costs 1. Play basketball? Decision
2. Do homework? Opp. Cost/Trade off
3. Playstation? Trade off

7. Thinking on the Margin
When you decide how much more or less to do, you are thinking on the margin.
Or thinking in units!

8. Decision-Making on the Margin
A boss/business must decide how many workers to hire