1. Warm Up
How are scarcity, shortage, choice, and factors of production connected?

2. Monday, January 11th, 2016
Objective: Students will be able to explain the concept of opportunity costs.
Purpose: Opportunity cost is one of the things we need to consider before making economic decisions.

3. Trade Offs
Trade-offs: alternatives that we sacrifice when we make a decision
Each decision we make involves trade-offs
The decisions that businesspeople make about how to use land, labor, and capital resources also create trade-offs

4. “Guns vs. Butter”
Every choice that we make involves trade-offs, which means giving up one benefit to get another. Individuals, businesses, and even entire nations face these trade-offs.
What does a nation gain when it chooses to spend more on its military? What does that nation give up?

5. Trade-Offs Society and Trade-offs:
Countries also make decisions that involve trade-offs. Economists simplify their explanations of the trade-offs countries face by using the example of guns and butter.
In short, the more butter that a country produces, the fewer guns that the country can produce.
This also works vice-versa.

6. Opportunity Cost
Usually one alternative is more desirable for a country/business/individual than another.
The MOST DESIRABLE alternative given up as the result of a decision is called the Opportunity Cost.

7. Opportunity Cost If I gave you a choice between these four candy bars…
A B C D
Which one would you choose?
Which one (s) would be your opportunity costs?