Unit What trade-offs exist?

Key Terms  Choice: a decision between one or more alternatives  Scarcity- resources are limited in supply e.g. raw materials, time  Trade-off- where the selection of one choice results in the loss of another

Cost is more than money  The economic problem is all about making choices. A choice means there are more than two options.  Making decisions and suffering trade-offs cause people to experience an opportunity cost.  Opportunity cost measure the value of the benefits you have lost through making a decision.

Business Decisions  Make a list of decisions that a hairdressers will need to make on a regular basis.

Business Decisions In 2007 Topshop paid the supermodel Kate Moss £3 million What are the opportunity costs and trade-offs for Topshop paying Kate Moss £3 million.

Government Decision The government raises money through taxation and borrowing. Decisions need to be made about spending the money. The government decides to spend £2 million on improving the NHS, what are the opportunity costs and trade- offs.

Revision Essentials  Choices – Decisions that need to be made as a result of having scarce resources.  Opportunity Cost – The value of the next best alternative that has been given up.  Trade-off – The item we have to give up in order to get something else.

Task Missing Words Mini case True/False