1. Econ “Economic Choice Today: Opportunity Cost”
Unit 1, Chapter 1, Section 2

2. Objectives understand why choice is at the heart of economics
explain how incentives and utility influence people’s economic choices
consider the role of trade-offs and opportunity costs in making economic choices
demonstrate how to do a cost-benefit analysis

3. Making Choices Factors that shape the economic choices people make:
incentives: encouraging people to act in certain ways
utility: satisfaction gained from using a good or service
economize: decisions made according to costs & benefits
trade-off: alternative given up by making an economic choice

4. economic choice trade-offs: choice alternatives: opportunity costs
incentives: encourage a particular choice
utility: benefit derived from that choice
economizing; balancing costs and benefits of choice

5. Trade-Offs and Opportunity Cost
Trade-offs: taking one course during the summer for extra college credit, then spending 4 weeks at the beach, instead of two courses during the summer for maximum extra college credits.
Trade-offs?
Opportunity cost: spending a year working, or 6 months working and 6 months travelling to see friends.
Opportunity cost in each situation?

6. Analyzing Choices
cost-benefit analysis: decision-making grid 1 hr. study(choice) = D in Econ (benefit) = 1 hr. with friends(O. Cost) 6 hrs. study = A in Econ = 6 hrs. with friends

7. Writing Focus
Explain the relationship between: A: incentive and utility, and B: trade-off and opportunity cost