1. WARM-UP
Over the weekend, what type of decision(s) did you have to make?
explain the decision(s) you made, what were the other options you had to choose from, and what was the deciding factor for you to choose the option(s) you did.

2. “Three Little Pigs”

3. (exchanging one thing for something else)
TRADE-OFFS
(exchanging one thing for something else)

4. Requires we take into account all costs and benefits from action.
B. Opportunity Costs is the value of the next best alternative given up for the alternative that was chosen.
1. includes more than just $. a. discomforts and inconveniences.
HOW IS COST MEASURED?

5. C. All businesses have fixed and variable costs.
1. Fixed costs
a. expenses that are the same no matter how many units of a good are produced.
2. Variable costs
a. expenses that change with the number of products produced.
D. Fixed + Variable costs = Total costs
1. Average total costs = total cost divided by quantity produced

6. E. Marginal Costs
1. Extra cost of producing one additional unit
F. Business measures total revenue and marginal revenue
1. Decides the amount of output which will produce the greatest profits.

7. G. Total revenue = # of units sold x avg. price/unit
1. Marginal revenue is the change in total revenue that results from selling one more unit of output.
H. We do something because we expect to achieve some benefit.
1. Marginal benefit is this extra benefit.

8. Cost-Benefit Analysis chart
MARGINAL BENEFITS
MARGINAL COSTS

9. Cost-Benefit Analysis chart
MARGINAL BENEFITS
MARGINAL COSTS