1. Trade-offs and Opportunity Costs
Chapter 1.2
Trade-offs and Opportunity Costs

2. Review What is Scarcity?
Trying to meet unlimited wants with limited resources
Because we have scarcity, we have to make choices

3. Choices and Trade-offs
The economic term for choices is Trade-off
A trade-off is a choice that involves giving up some of one thing to have more of another
Trade-off is sacrificing one good or service to purchase or produce another
Trade-offs are important because of scarcity
Trade-offs determine how we will use our scarce resources
Trade-offs result in opportunity costs

4. Opportunity Costs Opportunity costs definitions
The results of trade-offs we make because of scarcity
The next best alternative use of your resources
Opportunity costs are opportunities lost

5. Production Possibility Curves
The maximum combinations of things that can be produced from resources
Show the result of our trade-off
Classic example is trade-off between guns and butter
Zone of Terror