2 Scarcity, Opportunity Cost, Trade Offs, & Ppc

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2 Scarcity, Opportunity Cost, Trade Offs, & Ppc

  1. 1. Principles of Economics Scarcity, Opportunity Cost & Trade-Offs
  2. 2. Question of the Day What country is the traditional home of the tango? In 2001 it defaulted on $93 billion worth of debt. Argentina
  3. 3. • How does • What are two key economics help us components that understand the help us think like an world? economist?
  4. 4. What is scarcity? • The result of an inability to satisfy all of everyone's wants • What is to be produced, who’s going to get it, how’s it going to be produced, and when is it to be produced? • What resources are scarce in our society? • How does scarcity affect you?
  5. 5. Scarcity affects me…
  6. 6. • What is the true cost of anything? –The amount of money you spend? –What about whatever you have to give up in its place? • That is called, “opportunity cost.”
  7. 7. Opportunity Cost • The best alternative you give up when making a choice.
  8. 8. • Who should the • Should I spend my Lions take with the time studying math first overall pick in or studying social the draft? studies? – What is the – What is the opportunity cost? opportunity cost of studying math all night?
  9. 9. Trade-Offs A choice that involves giving up some of one thing to have more of another • How do you decide what to give up? • Will people always agree? • Therein lies the basis of most politics.
  10. 10. Marginal Benefit/Cost • Marginal Benefit • Marginal Cost – The extra or – The extra or additional benefit of additional cost of a a decision. decision. Why do drive-up ATM’s have Braille on the keypads?
  11. 11. What is the opportunity cost of going to college after high school?
  12. 12. What is the opportunity cost of spending $20 on a date?
  13. 13. What are three resources that are scarce for a factory owner?
  14. 14. What does a PPC show?
  15. 15. What does it mean when a PPC moves outward?
  16. 16. How does a rational person decide what to give up in a trade-off?
  17. 17. What does “marginal” mean?

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