Unit 1 Lesson 4

1. Unit 1 Lesson 4 To Choose or Not to Choose? That is Not the Question

2. Do we have a choice? • Todd recently purchased his own car on credit. He works at a part-time job at an auto-wrecking firm to earn the money he needs to make payments on his new car. Lately, his work in school has declined. When his teacher asked him if he was studying for the tests, he replied, “Not really. I’d like to study more, but I have no choice. I’ve got to keep working to pay off my car loan.” • Did Todd have alternatives in his situation? What are those alternatives?

3. Describe a situation where you may have felt you had no choice?

4. Jerry does a cost -benefit analysis of installing illegal cable. He decides to commit the crime when he finds out there will be 75 televised Mets games on TV. What are Jerry’s choices?

5. Alternatives and Choices • A world of scarcity forces people to choose among competing alternatives. Naturally, people try to pick the alternative that provides the greatest benefit at the lowest cost. Sometimes alternatives have such high costs that we don’t even consider them seriously.

6. Alternatives • An alternative is one of many different actions that we might take in a given situation. If we have $20 to spend, one alternative might be to buy a DVD; another alternative might be to buy pizza for friends. If we are hiking and meet a grizzly bear on the path ahead, one alternative might be to make ugly faces at it in the hope that it will run away; another alternative might be to get out of the area as quickly as possible.

7. Choices • A choice is the course of action we take when faced with a set of alternatives. Some people with $20 to spend will choose to buy the DVD, others the pizza, still others might choose a different alternative altogether. In the hiking example, not many people would choose the face-making alternative because of its likelihood of failure.

8. Directions: Read each of the cases. Identify the alternatives and the anticipated costs and benefits for each situation. Indicate which alternative you would choose by putting a check next to it. Choice Grid 1 is completed for you as an example. • Ashley desperately wanted to attend a concert with her friends. Unfortunately, she could not get a ticket for the night on which her friends were going to the concert. She said she had no choice but to stay home with her family and watch TV. Did Ashley have a choice? Choice Grid 1

9. With your shoulder partner complete Choice Grid 2 and 3. Reduce profits, maybe lose money and go out of business. Keep prices the same and customers happy. 2. Samantha Marsh operates Sam’s Spicy Subs & Wraps, a sandwich stand near Jefferson High School. Every day she sells her special sandwiches and wraps to loyal high school customers who flock to the stand during lunch hour. Recently, Sam raised her prices by $1 per sandwich, Several customers protested. They said the sandwiches now cost more than buying lunch at the burger shop up the street, or-worst yet-more than buying lunch at school. Sam explained that her costs had gone up because of new license fees and regulations imposed by the City Health Department. She had no choice but to increase her prices, she said. Customers might not buy as many sandwiches-reduce sales. Keep prices and profits about the same. Customers might not like the new product, maybe lose sales. Keep profits about the same. Customers might buy less, maybe lose money. Keep profits about the same.

10. With your shoulder partner complete Choice Grid 2 and 3. 3. Mr. Otto Worker owns a factory that supplies airbags and global positioning systems (GPS) to U.S. automobile manufacturers. Otto has fallen on tough times. Imports from Europe and Asia have cut into sales of U.S. cars, and many of Otto’s friends and employees have been laid off. Looking over the almost-empty factory, he says to the visiting U.S. senators who are touring this economically depressed area, “America has no choice: we must restrict imports of foreign cars and trucks to save U.S. jobs.” Difficult to transform the plant and equipment. Keep profits about the same. Increased sales. Difficult to get a contract. No more worries about competing with foreign producers. Lose money. Employees out of work. Few obvious costs to this owner and workers but increased costs for others. Increased sales and jobs for his workers.

11. Goods and Services • Use the phone book for this activity. The phone book is organized by category. Look at the categories that you find in the yellow pages. Are they for the sale of goods or services? List 15 categories under goods and 15 under services.

12. Closure Objectives Concepts Economizing behavior Considering the costs and benefits of various alternatives and choosing the one with the greatest net benefits. • Identify costs and benefits associated with various alternatives. • Effective decision making requires comparing the additional costs of alternatives with the additional benefits. Most choices involve doing a little more or a little less of something; few choices are all-or-nothing decisions. • Make economizing choices, given competing alternatives. • People engage in economizing behavior; consciously or tacitly, they weigh the relative benefits and costs of each alternative and try to choose the one that will provide them the greatest net benefits.