Thursday Please get out your Key Terms (7-15) 1 definition + 1 example/ mem. dev = credit Don’t forget!.... Lab 1 tomorrow/ no auction

What is a “trade off” ?????

Trade-off: exchanging one good for another Think of a trade-off as “weighing the pros & cons” in decision making A way to organize a decision’s factors

Examples of Trade Offs… If you choose to buy an iPhone, you’re going to give up some of your income… If you’re taking this class, you’re not at home sleeping….

What are benefits to both. That “list” is how you make your decisions… What are benefits to both? That “list” is how you make your decisions…. & recognize trade-offs ? Example: The ‘Would You Rather’ Game! o0o0o0o0o0o

The cost is what you give up in order to get or do something else The Cost of Trade-Offs The cost is what you give up in order to get or do something else VS Example: Time is a scarce resource…there are only so many hours per day so you prioritize (study vs. COD)

Opportunity cost: the value of the next best alternative that had to be given up to do the action that was chosen You constantly make trade-offs on a daily basis The decisions you make when it comes to time or $$ spent should be given thought BUT even when given thought you give up using that time or $$ for other factors What is the BIGGEST BUMMER on that list of factors? Opportunity cost

Example Right Now…. I’m writing this lesson for tomorrow…. Sleeping 4 Watching Tropic Thunder 2 Working on my Etsy site 6 Making jewelry 8 Working on my sister’s wedding 9 Spending time with my bf 3 Exercising 10 Eating 1 Looking for shoes online 7 Reading the ‘Life of Pi’ 5 There are 10 other things I could be doing. I’ve rated these things from 1-10. 1 = I’d rather be doing the most 10 = I’d rather be doing the least So… What’s my opportunity cost in writing this lesson?

Your Turn! FOOD FOR THOUGHT: You’re sitting in school right now. List 10 other things/ alternative that you could be doing instead. Rank them from 1-10… 1 = you’d rather be doing this the most 2 = you’d rather be doing this the least Finally, circle your #1 or… your opportunity cost! FOOD FOR THOUGHT: *Always be aware of your priorities (ranking) in decision making & DEFINITELY your opportunity cost*

What are ALL of the steps involved with each of these? Sunk Costs sunk costs are retrospective (past) costs that have already been “spent” and cannot be recovered Movies Break Ups Crappy Food Order … What are ALL of the steps involved with each of these?

The Approach to Sunk Costs You shouldn’t consider PAST decisions when making FUTURE choices, since you cannot alter what is in the past

More Would You Rather’s?...

Your Opportunity Cost: Trade Offs sunk costs are retrospective (___________) costs that have already been “spent” and _______________be recovered 1 example: ________________ Trade-off: ____________________________________ - If you choose to buy an iPod, you’re going to give up some of your __________________… - If you’re taking this class, you’re not at home __________________…. - What are benefits to both? * That “list” is how you make your ______________________…. & recognize trade-offs You shouldn’t consider __________ decisions when making ___________ choices, since you cannot alter what is in the past The Cost of Trade-Offs - The cost is what you _____________in order to get or do something else - _________is a scarce resource…there are only so many hours per day so you ______________ __________________________________: the value of the next best alternative that had to be given up to do the action that was chosen You constantly make trade-offs on a ____________basis The decision you make when it comes to time or $$ spent should be given thought BUT even when given thought you give up using that time or $$ for __________________ You’re sitting in school right now. List 10 other things/ alternative that you could be doing instead. Rank them from 1-10… 1 = you’d rather be doing this the most / 2 = you’d rather be doing this the least……….Finally, circle your #1 or… your opportunity cost! FOOD FOR THOUGHT: *Always be aware of your priorities (ranking) in decision making & DEFINITELY your opportunity cost* [other things you could be doing – rank (1-10)] [other things you could be doing – rank (1-10)] _____________________ _______ ______________________ ______ Your Opportunity Cost: