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Trade offs and Opportunity Cost. Trade Offs Trade Offs are “either/or” choices which a person makes. There are choices made every day which involve trade.

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Presentation on theme: "Trade offs and Opportunity Cost. Trade Offs Trade Offs are “either/or” choices which a person makes. There are choices made every day which involve trade."— Presentation transcript:

1 Trade offs and Opportunity Cost

2 Trade Offs Trade Offs are “either/or” choices which a person makes. There are choices made every day which involve trade offs. Doing one thing means you give up doing something else. 1Er1zs 1Er1zs

3 Trade offs lead to “costs” When you make a trade off, you give up something to get something else. The next most desirable choice that you gave up is called the “opportunity cost”.

4 Learning Targets for Chapter 1: 1. I can understand the concept of scarcity and its role in decision- making. 2. I can identify and give real life examples of the factors of production. 3. I can list and explain tradeoffs and identify opportunity cost in personal decisions in order to make informed choices.

5 Note-Learning target #3 is… 3. I can list and explain tradeoffs and identify opportunity cost in personal decisions in order to make informed choices. Can you do this?

6 Identifying Trade Offs Write down 3 examples of trade offs from your own life.] What was the “opportunity cost” of each? Write down 3 examples of trade offs from current events. What was the opportunity cost of each?

7 Marginal Cost/Marginal Benefit Marginal Cost is the additional cost of using one more unit of a good or service. Marginal Benefit is the additional satisfaction gained by using one more unit of a good or service.

8 Marginal Cost/Marginal Benefit Example: Fred decided to study one extra hour for his test the next day. This cost him time watching his favorite zombie movie. Fred scored a 93% on his test, up from an 79% on the previous test.

9 Cost Benefit Analysis Weighing the costs against the benefits. Basically- “Is it worth it?” Using “marginal analysis” you can be more precise- weigh the extra cost against the extra benefit.


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