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L.T. 3

I can list and explain tradeoffs and identify the opportunity cost when making decisions

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Why is What we want scarce?

  • Our wants always exceed our resources
  • With Limited Resources, Scarcity is Everywhere
  • Shortages are Temporary, Scarcity is Forever

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  • There is no such thing as a free lunch!!!
    • Milton Friedman

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What do we give up when we make a choice?

  • Utility = satisfaction you gain from consuming a product or service
  • Opportunity Cost = the value of the next best alternative that is given up when making a choice
  • Tradeoffs = All the opportunities given up
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Learning Target Pg. 2

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How are trade offs different from opportunity cost?

  • Tradeoffs are all the alternatives not chosen. The opportunity cost is the value of the next best alternative that could have been chosen.

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Tradeoffs & Opportunity Cost

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Poster: Factors of Production- pick a business/industry

  • (3-4)Land- anything used naturally from the earth
  • (3-4)Labor- different types of jobs people have
  • (3-4)Capital- tools/objects used to produce good/service
  • (just 1!)Entrepreneur- person who owns/started business

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Choice:

Opportunity cost:

Trade-offs:

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Lunch alternatives today

  • Mini corndogs
  • Cheese stuffed crust pizza
  • Cheeseburger with potato of the day
  • Chicken filet sandwich with potato of the day
  • Hamburger with potato of the day
  • Spicy chicken filet sandwich with potato of the day
  • Turkey ham and swiss flatbread sandwich
  • Vegetarian salad
  • Lunch from home

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Choice:

Opportunity cost:

Trade-offs: