1. Costs versus Benefits

2. WHICH ONE OF THESE TWO THINGS WOULD YOU RATHER BE DOING RIGHT NOW?

3. COSTS AND BENEFITS
A Cost is something you give up in making a choice A Benefit is something you gain. What would be the costs and the benefits of sleeping right now?
The costs are what you are giving up when you make a choice, the benefits are what you gain… If I were still sleeping right now, I would not be at work, and therefore, making no money… which is a cost. The benefit to sleeping would be that I am well rested and comfy!

4. COSTS AND BENEFITS
WHY MUST YOU CHOOSE?
BECAUSE OF SCARCITY
Why have you chosen to come to school instead? What are the costs and benefits?
So why have you chosen to come to school instead? I know many of you will say, “I have to” but really, there are tons of benefits to coming to school… as you get older and the age where you can work and drive, there will probably also be a lot of costs to coming to school. In your notes on page 19, write a few costs and a few benefits of attending school. Feel free to work with a friend through these activities!

5. SCARCITY
SCARCITY TELLS ME I CAN’T ALWAYS GET WHAT I WANT, I HAVE TO MAKE A CHOICE. SINCE YOU CAN’T HAVE EVERYTHING YOU WANT, ECONOMICS HELPS US GET THE MOST OUT OF WHAT WE CAN HAVE.
Unfortunately, we cannot be both sleeping in bed AND at school working… this is called scarcity. Have you ever heard your parents say, “you can’t always get what you want”? There is a song too, but I will spare you my singing voice. Economics helps us make the most out of what we can have… it helps us make choices. It is not always about the money, but any decision we make… we have to take into account what we can and can’t do, what we should and shouldn’t do and what is feasible in our situation (for example--- I’d love to buy a bigger house, but I don’t make enough money). In your notes on page 19, it talks about there being costs to every choice we make. What are some examples of bad choices? Was there a cost to those choices? Write down an example of when you made a bad choice and the cost of the choice you made.

6. T.I.N.S.T.A.A.F.L. “There is no such thing as a free lunch”?
Have you ever heard the phrase:
“There is no such thing as a free lunch”?
There is no such thing as a free lunch… even if the food is free, you are still giving up something else to be there

7. OPPORTUNITY COST
EVEN THOUGH THE SIGN SAYS SO, IS IT TRULY FREE? I MAY NOT GIVE UP MONEY, BUT WHAT AM I GIVING UP BY ATTENDING?
You know how we joke that coming in second is really a first place loser? Think of that when you think of opportunity cost. When you make a list of everything you would like to do when you get home from school and you choose the first thing on your list, the second place item is your opportunity cost, it is the first thing you gave up when you made your choice.

8. IF I EAT LUNCH FROM 12:00 TO 1:00 P.M., WHAT CAN’T I DO?
So if you got a free lunch from 12-1, what are you NOT doing? Here are some examples, but I want you to write down some things YOU would like to do instead in your notes on page 19.

9. OPPORTUNITY COST IS THE BEST OPTION GIVEN UP WHEN YOU MAKE A CHOICE
What is the Opportunity Cost of the following choice?
Buying a gift for a friend.
Working at a job after school.
Waiting in line for an hour to buy a new cell phone.
Playing on your X-Box for two hours after dinner.
Did you all have the same answers? Why not?
Here are some choices that were made, in your notes, give me an example of the opportunity cost of each of the following items…. Remember it is the first place loser, so only tell me ONE other thing you could do instead.

10. WHAT IS ECONOMICS?
Economics is the study of how people make choices. When you make a good economic decision the benefits will be greater than the costs.
Economics is the study of the decisions we make or how we make choices. Every time you make a good economic decision, the benefits will outweight the costs, and when you make a bad decision, the costs will be greater than the benefits. Think of it like a pro and cons list.

11. UTILITY = SATISFACTION
He made a good decision
He made a bad decision
When we are talking about how satisfied you are with a decision in economics, it is called utility. The greater the utility, the more satisfied you are. Make sure to write down utility in your notes!

12. PEOPLE RESPOND TO INCENTIVES
INCENTIVES are things such as rewards that motivate a person to do something. Punishment is meant to be a disincentive.
Incentives can be positives or negatives. They motivate people to do certain things. Jot this down in your notes!

13. Many people feel like there is great utility in opening their own business… what are some of the incentives when deciding to open your own business? Talk about it with your partner and see if some of your answers are on the next slide!
WHY DO PEOPLE MAKE THE DECISION TO GO INTO BUSINESS FOR THEMSELVES? WHAT ARE THE INCENTIVES?

14. HAVE MORE CONTROL OVER MY WORK SCHEDULE
BENEFITS
COSTS
PROFIT
BE YOUR OWN BOSS
FREEDOM
FILL A NEED
HAVE MORE CONTROL OVER MY WORK SCHEDULE
PAID MORE FOR MY WORK
GREAT CHANCE OF FAILURE
NO ONE TO SHARE THE COSTS WITH
NO ONE TO SHARE RESPONSIBILITIES OR SKILLS
DO THE JOB OF THE WORKER AND THE BOSS
There are pros and cons, incentives and dincentives, or costs and benefits to opening your own business, but as they say in economics, the greater the risk the greater the reward…. IF it pays off…

15. INCENTIVES HELP PEOPLE MAKE CHOICES
THERE WAS A TIME WHEN THE MAJORITY OF ADULT AMERICANS SMOKED AND PEOPLE THOUGHT IT LOOKED COOL.
Back in the day it looked cool to smoke, this was an incentive to smoke… think of it like propaganda… if you smoke, you will be cool… they even had cigarette mascots called Joe Cool!

16. CHANGING INCENTIVES CHANGE PEOPLE’S CHOICES
NOW LESS THAN 25% OF THE U.S. POPULATION SMOKES AND THE NUMBERS HAVE BEEN SHRINKING FOR DECADES. WHAT CHANGED?
WE GOT EDUCATED
But incentives can change… for instance, people became more educated about the risks of smoking and the health risks it can cause, and now we have less than 25% of the American population who smokes.

17. SO, TO RECAP!!! SCARCITY TELLS US WE CAN’T HAVE EVERYTHING WE WANT
EVERY DAY OF OUR LIVES WE HAVE TO MAKE CHOICES
IN MAKING CHOICES WE WEIGH THE BENEFITS AGAINST THE COSTS
NOTHING IS FREE, THERE IS ALWAYS AN OPPORTUNITY COST
A GOOD ECONOMIC DECISION CREATES MORE BENEFITS THAN COSTS
INCENTIVES HELP US TO CHOOSE
Just a quick recap…