1. New Key Terms
Trade offs: All the possible choices or options sacrificed when a choice is made
Opportunity Cost: The next best alternative sacrificed when a choice is made
Guns or Butter:The choice that the government makes between allocating scarce resources to satisfying either the military or the non-military needs and wants of our society (nation).

2. Additional key terms
Standard of Living: A measure of how well a society satisfies the needs and wants of its people.
GDP: The value of all the products (goods and services) produced in a nation.
Per-capita GDP: A measurement determined by the GDP of a nation divided by its population.
Sunk Costs: Cost which have already been incurred.

4. The Road Not Taken” by Robert Frost
Every choice has a cost because choosing to do one thing means giving up the opportunity to do something else.

5. We recognize that…
Faced with the same option, different people often make different choices because they put different values on each alternative’ s costs and expected outcomes

7. What are tradeoffs?
Think of all the choices that you had with regards to eating breakfast this morning.

8. OR…
Think of all the items you could buy with $50 at the mall this afternoon

9. OR…
Think of all the choices of what you could be doing if you were not in this classroom right now?

10. Trade offs
Tradeoffs are all the REALISTIC choices that we have when allocating scarce resources such as our time or money

11. Opportunity cost and trade offs

12. Brad had to pick between two different women
Actually he had millions of women to choose from but it came down to just these two

13. His choice

14. Lopez’s Choice

15. Difficult Choice….

16. Trade Offs
Think about the alternatives of how you could spend $100 at the mall
The way the government could use $1,000,000
The options we have in Brentwood for eating “junk food”

17. Opportunity cost
You decide to go shopping with your friends this weekend.

18. At the mall you go to your favorite store

19. Where your boyfriend used to work

20. You need to buy him cologne as a gift and you narrow it down to either…

21. “Fierce”

22. Or “Proof”

23. You decide to get the “Fierce”

24. What was the opportunity cost of your decision?
The “Proof”

25. You decide to continue shopping
You still have a few extra $20s in your purse
You go over to the women’s clothing
After considering all the options (“trade offs)
You settle on one of two polo shirts

26. A blue shirt to match your eyes

27. Or a new shirt to wear in Lopez’s class next Thursday

28. You decide to accept the opportunity cost of the blue shirt so that you can be more fashionable in Econ Class so you buy the pink polo

30. Guns versus Butter

31. SUNK COSTS ACTIVITY Why so difficult to end the war?
Why we never discontinue government programs?
Why people sometimes stay in bad relationships?