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Economic choices  We are faced with choices because we do not have enough productive resources to satisfy all of our wants and needs.

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Presentation on theme: "Economic choices  We are faced with choices because we do not have enough productive resources to satisfy all of our wants and needs."— Presentation transcript:

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2 Economic choices  We are faced with choices because we do not have enough productive resources to satisfy all of our wants and needs.

3  Economics: the study of how we make decisions in a world where resources are limited.

4 Need or want? Needs Wants  Required for survival  Things we would like to have

5  The fundamental economic problem is scarcity (when we do not have enough resources to produce all of the things we would like to have).

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7 Trade-offs  Have to take all aspects of transactions into account  Ex: you trade money to buy a product

8  Opportunity cost is the next best thing that you had to give up for the choice you made (includes money and inconveniences)

9  Fixed costs do not change no matter how much is produced  Variable costs change w/the amount produced

10  Fixed Costs + Variable Costs=Total Cost

11  Marginal cost is the cost of producing one more unit of output.  Businesses look at total and marginal cost to determine final cost

12 Cost-Benefit analysis  Econ. model that compares marginal costs and benefits  Benefits should outweigh the costs when making decisions

13 Your role in the economy  U.S. has a market economy  Choices you make affect choices businesses make (like what to make or how much to charge)

14  Market economies are based on capitalism and free enterprise  Incentives try to persuade people to make certain economic decision

15 Making wise choices  Rational choice involves consumer’s perceptions  Benefits society by making the best use of scarce resources


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