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Principles of Economics
 Scarcity, Opportunity Cost &
           Trade-Offs
Question of the Day
What country is the traditional home of
the tango?

In 2001 it defaulted on $93 billion worth of debt.




               Argentina
• How does            • What are two key
  economics help us     components that
  understand the        help us think like an
  world?                economist?
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?
Scarcity affects me…
• 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.”
Opportunity Cost

• The best alternative you give
  up when making a choice.
• 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?
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.
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?
What is the opportunity cost
of going to college after high
           school?
What is the opportunity cost
of spending $20 on a date?
What are three resources that
are scarce for a factory owner?
What does a PPC show?
What does it mean when a
 PPC moves outward?
How does a rational person
decide what to give up in a
        trade-off?
What does “marginal” mean?

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2 Scarcity, Opportunity Cost, Trade Offs, & Ppc

  • 1. Principles of Economics Scarcity, Opportunity Cost & Trade-Offs
  • 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. • How does • What are two key economics help us components that understand the help us think like an world? economist?
  • 4.
  • 5.
  • 6. 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?
  • 7.
  • 9. • 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.”
  • 10. Opportunity Cost • The best alternative you give up when making a choice.
  • 11. • 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?
  • 12.
  • 13. 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.
  • 14. 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?
  • 15. What is the opportunity cost of going to college after high school?
  • 16. What is the opportunity cost of spending $20 on a date?
  • 17. What are three resources that are scarce for a factory owner?
  • 18. What does a PPC show?
  • 19. What does it mean when a PPC moves outward?
  • 20. How does a rational person decide what to give up in a trade-off?