Mpp#002+cost.determination.(41)

114 views

Published on

Published in: Education
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
114
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Lesson 5: Opportunity Cost
  • Mpp#002+cost.determination.(41)

    1. 1. EVERY CHOICE HAS A COST03/13/13 1
    2. 2. Which are difficult economic decisions? Preserve the desert tortoise or preserve the profits of a “greedy monopolistic land grabbing developer?” Preserve the desert tortoise or the stock earnings of retired Mrs. McGillicudy who owns stock in the “greedy monopolistic land grabbing developer’s” company? Preserve the desert tortoise or the Raven03/13/13 Lesson 2: Cost 2
    3. 3. Difficult Decisions Allocate Santa Catalina to Buffalo or native plants Allocate San Clemente to the endangered Plover ( bird) or land owners Allocate Mojave to environmentalists or motorbikes Northern forests to Spotted Owl or lumber and resulting jobs03/13/13 Lesson 2: Cost 3
    4. 4. Easy or difficult decisions? Easy decisions are between goods and bads. Most decisions are between two goods. In the political arena, the decision is often painted as good or bad, but that is not usually the case.03/13/13 Lesson 2: Cost 4
    5. 5. OPPORTUNITY COST The Cost of a making a Choice What will you (did you) need to give up? Perhaps the most important concept in economics. Things don’t have costs, choices do.03/13/13 Lesson 2: Cost 5
    6. 6. Consider: what you choose to dowith “free” football tickets Alternative 1 ~ Use the tickets yourself Alternative 2 ~ Give the tickets to friends03/13/13 Lesson 2: Cost 6
    7. 7. The decision regarding the “free” tickets Alternative 1 ~ Use the tickets yourself CHOICE Alternative 2 ~ Give the tickets to friends OPPORTUNITY COST03/13/13 Lesson 2: Cost 7
    8. 8. The results of the decision Choice: The subjective evaluation of how “attractive” the selected alternative is Opportunity cost: the subjective evaluation of the best alternative NOT selected not what COULD have been done but what WOULD have been done03/13/13 Lesson 2: Cost 8
    9. 9. Consider: some new alternatives03/13/13 Lesson 2: Cost 9
    10. 10. You could narrow the alternatives down to two03/13/13 Lesson 2: Cost 10
    11. 11. Identify the choice and the opportunity cost CHOICE OPPORTUNITY COST03/13/13 Lesson 2: Cost 11
    12. 12. Consider: how to best use their human capital on their 3 month anniversary?03/13/13 Lesson 2: Cost 12
    13. 13. Consider: (some) Alternatives03/13/13 Lesson 2: Cost 13
    14. 14. then they narrow these down to two03/13/13 Lesson 2: Cost 14
    15. 15. Identify the Choice and the Opportunity Cost OPPORTUNITY COSTCHOICE03/13/13 Lesson 2: Cost 15
    16. 16. Consider: a “free” hike in the woods03/13/13 Lesson 2: Cost 16
    17. 17. other “Choice” examples Typing a term paper “Free” parking Resources for “free” early childhood education Resources for national defense Reduced class size Wildlife habitats03/13/13 Lesson 2: Cost 17
    18. 18. Consider: Preserving the environment is costly.03/13/13 Lesson 2: Cost 18
    19. 19. Economic Decisions are made with incomplete information Expectations can be erroneous03/13/13 Lesson 2: Cost 19
    20. 20. Money A way of exchanging personal resources for goods and services You work at California Pizza You earn money You use money to buy goods and services You exchanged your human capital for goods and services that you desired03/13/13 Lesson 2: Cost 20
    21. 21. Money is a tool for transferring resources and goods and services03/13/13 Lesson 2: Cost 21
    22. 22. Money is a tool for transferring resources and goods and services03/13/13 Lesson 2: Cost 22
    23. 23. Money is a tool for transferring resources and goods and services03/13/13 Lesson 2: Cost 23
    24. 24. The Curse of the Crawling Camel Clyde holds the record It’s past the record He sees his salvation ahead It is a mirage There is no such thing as a free lunch! There is really no such choice as a free choice!03/13/13 Lesson 2: Cost 24
    25. 25. Stating economic choices have an “opportunity cost” is the samething as stating scarce resources have “alternative” uses.03/13/13 Lesson 2: Cost 25
    26. 26. Opportunity Cost is defined as the value of the best foregone alternative at the time that you make the decision.03/13/13 Lesson 2: Cost 26
    27. 27. Consider: what does it cost you? You have a scholarship for full tuition and all books. There are no money costs to you. Some say your education is free.03/13/13 Lesson 2: Cost 27
    28. 28. If you can’t do it, it’s not an opportunity cost!03/13/13 Lesson 2: Cost 28
    29. 29. Opportunity cost is: subjective determined only by the decision-maker Why are you watching television when you could be outside on such a beautiful day? • or playing video games • or talking to your girlfriend or boyfriend03/13/13 Lesson 2: Cost 29
    30. 30. RUSSIAN RESOURCES land human capital OR physical capital entrepreneurship03/13/13 Lesson 2: Cost 30
    31. 31. ECONOMICS The study of individual choices concerning the use of limited resources among competing wants Wants, resources, choices03/13/13 Lesson 2: Cost 31
    32. 32. ECONOMICS Individuals, not groups Finance is an application of economics Economics can’t distinguish needs from wants ~ needs have no alternatives and therefore no choice and therefore there are no economics In economics, people rank their wants according to their priorities.03/13/13 Lesson 2: Cost 32
    33. 33. Which of the following is an opportunity cost? a. A bad grade on a quiz because you didn’t study b. Your mother’s hurt because you forgot her birthday…….You Scum! c. Not going out with your friends because you are called in to work. d. All of the above are opportunity costs.03/13/13 Lesson 2: Cost 33
    34. 34. Why would an economist never say “The best things in life are free?”03/13/13 Lesson 2: Cost 34
    35. 35. Why would an economist never say “We should preserve old growth forests at all costs?”03/13/13 Lesson 2: Cost 35
    36. 36. An economist would never say “If it saves one life ~ whatever the cost ~ it’s worth it” becausethe statement ignores the concept of [………………………]”03/13/13 Lesson 2: Cost 36
    37. 37. What does it cost you? You were in love. You have been married 30 years. You are still in love. What does it cost you?03/13/13 Lesson 2: Cost 37
    38. 38. Main Points People choose because resources are limited and insufficient to fulfill their wants; people can’t have everything they want. It is easier to choose between goods and “bads” than good and goods. An economic decision involves using resources, goods or services Every economic decision involves a cost. There is no such choice as a free choice.03/13/13 Lesson 2: Cost 38
    39. 39. Main Points (continued ~ i) Opportunity cost is subjective and can only be identified by the decision maker. When people make a decision, they narrow the alternatives to two, select one (the choice) and give one up (the opportunity cost). Economics is the study of individual choices concerning the use of limited resources among competing wants.03/13/13 Lesson 2: Cost 39
    40. 40. Main Points (continued ~ ii) Money is a tool for transferring resources into goods and services or exchanging one good or service for another Economics and finance are different. Economics is about resources; economic reasoning can be applied to finance. In a study of economics, needs and wants can’t be distinguished. Economic reasoning ranks wants according to priorities.03/13/13 Lesson 2: Cost 40
    41. 41. 03/13/13 Lesson 2: Cost 41

    ×