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From Choices to Opportunity Costs

From Choices to Opportunity Costs. opportunity costs – the most valued alternative you give up to do something what you would have chosen instead. Would you rather have the Phantom OR Would you rather have……. A house in Vista $300,000 Honda Accord MSRP of $25,000 Gas allowance of $3,000

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From Choices to Opportunity Costs

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  1. From Choices to Opportunity Costs opportunity costs – the most valued alternative you give up to do something what you would have chosen instead

  2. Would you rather have the Phantom OR • Would you rather have……. • A house in Vista $300,000 • Honda Accord MSRP of $25,000 • Gas allowance of $3,000 • Monthly allowance for shopping of $1,000 for 1 year OR • Would you rather have……. • A $340,000 trip around the world for a year

  3. The cost of passing up the next best choice when making a decision. • opportunity cost. InvestorWords.com. Retrieved July 21, 2008, from InvestorWords.com website: http://www.investorwords.com/3470/opportunity_cost.html • Every choice we make has an opportunity cost. • The most valued opportunity or alternative you give up for your 1st choice is the opportunity cost.

  4. 1 phantom • 2 house in Vista, Honda, shopping, gas • 3 trip around the world • Opportunity cost is all about choices. • When you forgo doing homework to get on Facebook, your opportunity cost for getting on Facebook was your homework. • Your choice. Your opportunity cost.

  5. Decision Eat at Jack-In-The-Box Opportunity Cost Eat at Mc Donald’s High Opportunity Cost MacDonald’s reduces prices More choices added at Mickey D’s Certified Cleanest Fast Food Restaurant in SD County Increase the Opportunity Cost-Do Less of It I’m hungry. What should I do?

  6. Decision Eat at Jack-In-The-Box Opportunity Cost Eat at McDonald’s Low Opportunity Cost McDonald’s raises prices Only serves strawberry shakes E. Coli outbreak Decrease the Opportunity Cost-Do More of It I’m hungry. What should I do?

  7. 2 More Important Consequences of Scarcity • Because there is scarcity, there must be some way of deciding “who gets what” Rationing Device • Because there is scarcity, there is competition

  8. Rationing Device

  9. Rationing Device

  10. HOMEWORKReview Chapter 1.1 (p.6-13)as needed to complete the following: • At the end of your class notes, answer questions 4-6 Section Review p. 13 • Read p. 12 “Would People Go To College If Scarcity Did Not Exist?” and write an answer to the question on that page. • Create a comic strip showing the relationship of scarcity, choice and opportunity cost

  11. Using the Diagrams and flow charts in Ch. 1 (pg 10), create a comic strip displaying the following underlined concepts studied in class: • Wants • Resources displaying • Scarcity which creates • choices which leaves an • opportunity cost • Each Term will have a frame in the comic. • Choose a topic from your life • Demonstrate your understanding of the flow/connections • Use Voice Bubbles for each frame • Be creative! • Stick people rule! • Must all be original work. • Highlight the terms in your VoiceBubbles

  12. ECONOMICS is: • The science that studies the choices of people trying to satisfy their wants and needs in a world of scarcity…

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