1. OPPORTUNITY COSTS & INDIVIDUALS’ PREFERENCES
practice

2. QUESTIONS TO LEARN Economic choice and opportunity costs
Individuals’ needs preferences

6. Exercise 1.1 solution

7. EXERCISE 2

8. Exercise 1.2 solution

9. Exercise 1.2 solution

10. HOMEWORK
At next lesson you are to make a presentation (4-5 slides) in such themes (everybody choose his/her own theme) :
To define what is the production possibility frontier
To show the role of PPF in economic growth theory
To explain the PPF and innovations correlation
To explain the PPF and environmental pollution

11. To define what is the production possibility frontier The Production Possibility Frontier (PPF) shows the combination of goods that an economic system is capable of producing given the limited resources available to it at a specific time period with all its resources fully and efficiently used. At IB level, the PPF is usually 2 dimensional like the image below.

13. To show the role of PPF in economic growth theory

14. To explain the PPF and innovations correlation

15. To explain the PPF and environmental pollution
People pollute because it is the cheapest way they have of solving a certain very practical problem. How to dispose of the waste products remaining after production and consumption of a good???
Dying Aral Sea (Middle Asia’ Melioration Program results)

16. To explain the PPF and environmental pollution
Catastrophe at Caribbean Sea(British Petroleum Deepwater Horizon oil spill disaster at Gulf of Mexico in April 20 – September )

17. HOMEWORK
1. To make a table of effects changing the consumer equilibrium for: normal good (luxury & necessity); inferior good.
2. To make a table of consumers’ behavior for effects (definitions + examples):
- bandwagon
snob
Veblen

18. To make a table of effects changing the consumer equilibrium for: normal good (luxury & necessity); inferior good. Income effect attributes how a change in the consumer’s income influences his total satisfaction Substitution effect describes a change in consumption patterns due to a change in the relative prices of goods Price effect consists of the substitution effect and the income effect

22. To make a table of consumers’ behavior for effects (definitions + examples):
- bandwagon
snob
Veblen

23. CONSUMERS’ DEMAND TYPES
CONSUMER DEMAND
FUNCTIONAL
NON-FUNCTIONAL
SOCIAL
SPECULATORY
IRRATIONAL
VEBLEN EFFECT
BANDWAGON EFFECT
SNOB EFFECT

27. UNDERSTANDING TEST
Look at the picture and tell about the effect(s) of consumer choice/type of consumer demand producers (sellers) are manipulating

28. UNDERSTANDING TEST
Look at the picture and tell about the effect(s) of consumer choice/type of consumer demand producers (sellers) are manipulating

29. UNDERSTANDING TEST
Look at the picture and tell about the effect(s) of consumer choice/type of consumer demand producers (sellers) are manipulating

30. UNDERSTANDING TEST
Look at the picture and tell about the effect(s) of consumer choice/type of consumer demand producers (sellers) are manipulating

31. UNDERSTANDING TEST
Look at the picture and tell about the effect(s) of consumer choice/type of consumer demand producers (sellers) are manipulating