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ECONOMICS TOPIC 1 LESSON 2
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  • Slide 1
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    ECONOMICS TOPIC 1 LESSON 2

    Opportunity Cost and Trade-Offs

  • Slide 2
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    ESSENTIAL QUESTIONS

    How does economics affect everyone?

  • Slide 3
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    Making Decisions

    • •Individual Decisions

    • •Business Decisions

    • •Government Decisions

  • Slide 4
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    trade-off

    Economists point out that all individuals, businesses, and large groups of people—even governments—make decisions that involve trade-offs. A trade-off is the act of giving up one benefit in order to gain another, greater benefit.

  • Slide 5
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    Individual Decisions

    At every stage of life, you have to make trade-offs.

  • Slide 6
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    Business Decisions

    The decisions that businesses make about how to use their factor resources—land, labor, and capital—also involve trade-offs.

  • Slide 7
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    Government Decisions

    National, state, and local governments also make decisions that involve trade-offs. Economists and politicians use the term “guns or butter” to describe one of the common choices facing governments: the choice between spending money on military or domestic needs.

  • Question 8
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    Q.

    DEFINE What are trade-offs?

  • Question 9
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    Q.

    Identify Main Ideas Why do individuals, businesses, and governments make trade-offs?

    answer choices

    to make more money

    because resources are limited

    because large groups of people cannot easily make decisions

    to promote their values

  • Slide 10
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    Opportunity Cost

    • •Using a Decision-Making Grid

    • •Making the Decision

  • Slide 11
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    Using a Decision-Making Grid

    At times, the opportunity cost of a decision may be unclear or complicated. Using a decision-making grid can help you determine whether you are willing to accept the opportunity cost of a choice you are about to make.

  • Question 12
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    Q.

    Analyze Charts What would you do if you were Karen? Why?

  • Slide 13
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    Making the Decision

    After considering the opportunity cost of each alternative, choose the most desirable benefit. 

  • Question 14
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    Q.

    Check Understanding Which statement best describes opportunity cost?

    answer choices

    Opportunity cost is the value in dollars of a trade-off.

    Opportunity cost is the best choice in a decision.

    Opportunity cost is the best alternative decision.

    Opportunity cost is all the alternatives not chosen in a decision.

  • Slide 15
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    Thinking at the Margin

    From an economist’s point of view, when you decide how much more or less to do, you are thinking at the margin.

  • Question 16
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    Q.

    Karen decides to wake up two hours earlier to study with the expectation of raising her grade to a B. Analyze Charts Do you agree with that decision? Why or why not?

  • Slide 17
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    Analyzing Costs and Benefits

    eciding by thinking at the margin is just like making any other decision. Decision makers have to compare the opportunity costs and the benefits—what they will sacrifice and what they will gain. This decision-making process is sometimes called cost/benefit analysis.

  • Question 18
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    Q.

    Apply Concepts In which of these situations would a manufacturer decide to produce more units?

    answer choices

    The marginal cost is greater than the marginal benefit.

    The marginal cost is less than the marginal benefit.

    The marginal benefit is less than the marginal cost.

    The marginal benefit is equal to the marginal cost.

  • Question 19
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    Q.

    How does economics affect everyone?

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