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TOK: Economics lesson #3

TOK: Economics lesson #3. CHOICE, TRADE-OFFS, OPPORTUNITY COST. The basic problem of economics:. There’s not enough to go around There are not enough resources for everyone to have everything they want Scarcity: Everything is scarce. As a result of scarcity, choices have to be made.

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TOK: Economics lesson #3

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  1. TOK: Economics lesson #3 CHOICE, TRADE-OFFS, OPPORTUNITY COST

  2. The basic problem of economics: • There’s not enough to go around • There are not enough resources for everyone to have everything they want • Scarcity: Everythingis scarce

  3. As a result of scarcity, choices have to be made. • When an economic choice is made, an alternative is always foregone • Example: If you only have $10, you could go to the movies or go out to eat, but not both • Other examples? • Non-financial examples?

  4. Trade off • Choosing one thing makes you give up something else Opportunity cost • The next best alternative you forego when making a choice

  5. Ch. 2 DVDs • Opportunity Lost – Opportunity costs • On the PPF – introducing the production possibilities frontier • On the PPC – the PPF revisited

  6. Opportunity cost • What’s your opportunity cost for buying a bunch of new clothes? • Playing sports? • Having a part-time job? • Dating only one person in high school? • Of the nation spending more on the homeless? • On schools? • Paying off the national debt? • Government creating more jobs?

  7. PPC or PPF • Production Possibilities Curve • Production Possibilities Frontier

  8. Inefficiency and Growth • Where would unemployed resources (aka: an inefficient economy) be on the PPC? Growth?

  9. Other uses for PPF/PPC? • Luxury vs. necessities • Investment vs. consumption • Elderly vs. young • Popularity vs. grades • Others?

  10. FREAKANOMICS? Maybe….

  11. HOMEWORK? Maybe….

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