1. CHOICES 1-2

2. Objective
Analyze trade-offs and opportunity costs

3. Resources are Scarce

4. Trade-Offs: alternative choices
Opportunity Cost: the cost of the next
best alternative (time, $ or resource)
--what you have given up or lost
Cost-Benefit Analysis: The benefit
should outweigh the cost
Production Possibilities Frontier
Graph on projector

5. Opportunity Cost Example:
1. The opportunity cost of moving from a to b is…
2 Bikes
2.The opportunity cost of moving from b to d is…
7 Bikes
3.The opportunity cost of moving from d to b is…
4 Computers
4.The opportunity cost of moving from f to c is…
0 Computers
5.What can you say about point G?
Unattainable

6. Chapter 1 Review

7. The chapter 1 test is on Tuesday!!
1. Draw and label one PPF that shows the following:
A =efficient B=overheated
C=unattainable D=inefficient
2. Draw and label another PPF that compares these years: GDP Unemployment
A %
B %
C %
3. Label and draw circular flow.
4. Page 33 # 2, 4, 5, 9, 10, 13, 14 and 15
The chapter 1 test is on Tuesday!!