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Opportunity cost

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Opportunity cost

  1. 1. Opportunity Cost Economics 1
  2. 2. Learning Targets <ul><li>I can explain how opportunity cost affects my choices. </li></ul><ul><li>I can define trade-offs, guns or butter, and marginal thinking. </li></ul>
  3. 3. Trade-off <ul><li>All of the alternatives that we give up whenever we choose one course of action over another. </li></ul><ul><li>Individuals vs. Businesses. </li></ul><ul><ul><li>Pizza vs. HMWK?! </li></ul></ul>
  4. 4. Guns or Butter <ul><li>Military goods vs. consumer goods. </li></ul><ul><ul><li>Resources are limited! </li></ul></ul>
  5. 5. Opportunity Cost <ul><li>The most desirable alternative given up as the result of a decision. </li></ul><ul><ul><li>Whatever we are willing to sacrifice. </li></ul></ul>
  6. 6. Thinking at the Margin <ul><li>Deciding how much more or less to do... </li></ul><ul><ul><li>Involves adding one unit or subtracting one unit. </li></ul></ul>

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