1. As You Arrive… Sit with your partner from yesterday.
5-10 minutes to finish the assignment from yesterday.
Take out your guided notes.

2. MAKING ECONOMIC DECISIONS
What influences an entrepreneur’s decision of what factors of production to use?

3. What is scarcity?
Scarcity is when there is a limited supply available to meet unlimited wants
Scarcity occurs whenever we do not have enough resources to produce all the things we would like to have
Scarcity forces people to make choices about how they will use their resources

4. Making Trade-Offs
A trade-off is the alternative you face if you decide to do one thing rather than another
For example, you use a field to grow tobacco means the field cannot be used to grow soy beans.

5. Opportunity Cost
Opportunity Cost is the cost of the next best alternative use of time and money when choosing to do one thing rather than another
In other words, opportunity cost is what you must forgo in order to get something
Example- If you decide to stay after school for tutoring, the opportunity cost is hanging out with your friends

6. Types of Cost
Fixed Cost- expenses that remain the same no matter how many units of a good are produced
Example- mortgage or property tax
Variable Cost- expenses that change with the number of products produced
Example- Increased cost as production grows; the more bike helmets you make, the more plastic you have to buy

7. Types of Cost continued…
Total Cost- Fixed Cost + Variable Cost = Total Cost
Example- if fixed costs are $1,000 and variable costs are $500, what is the total cost?
Marginal Cost- Cost of making one additional product
Example- If the cost of producing 30 helmets is $1,500 and the cost to make 31 helmets is $1,550 then the marginal cost for one helmet is $50

8. Productivity and Specialization
Productivity is a measure of how efficiently resources are being used to produce goods and services
Specialization is when people, businesses, regions, and/ or nations concentrate on goods and services that they can produce better than anyone else

9. Division of Labor
Division of Labor is the breaking down of a job into separate, smaller tasks to be performed individually

10. Profit
Profit is the money a business receives for its products or services over and above its cost
How to have low cost in production?
Reduce labor cost
Reduce overhead cost
Reduce material cost