1. Do Now
What does it cost you to go watch a 49ers game?

2. Trade-offs + Opportunity Cost
Trade-off: a choice of 2 options
Opportunity cost: The value of the next best choice
-What is the opp. cost of playing an after-school sport?
- You are a drink company, and you chose to produce tea, what might be the opp. cost of that decision?

3. Production Possibilities Frontier
Curve showing all production choices given # resources, tech
l: Unused resources (Unemployed)
U: not currently possible (not enough resources)
A, B: efficient production

4. What is the opportunity cost of moving from point A to point B?
Why would a country ever produce at point l?
How can this country be able to produce at U?

5. PPF shifts based on:
- Technology and productivity
# of resources (Land, Labor, Capital)

6. Shift in one good Pretend an economy makes just coffee and tea.
- Huge breakthrough in tea production.
*shows that
tea is
improved
but coffee
is same.

7. Increasing Opportunity Costs
Increasing sloped shape from Law of Increasing Opp. Costs
different efficiency of resources…
Ex: some people good at making clothes. Others good at making computers….
* As more resources shift to producing 1 good, production get’s less efficient (higher opp. Cost)

8. Allocative Efficiency (Socially Optimal)
Produce/consume where MB=MC
*If Q too low: MB>MC = Buy more!
*If Q too high: MC>MB = Buy less!