Unit 5 5.1.1 What trade-offs exist?

Key Terms Choice: a decision between one or more

alternatives

Scarcity- resources are limited in supply e.g. raw materials, time

Trade-off- where the selection of one choice results in the loss of another

Cost is more than money The economic problem is all about

making choices. A choice means there are more than two options.

Making decisions and suffering trade-offs cause people to experience an opportunity cost.

Opportunity cost measure the value of the benefits you have lost through making a decision.

Business Decisions Make a list of decisions that a

hairdressers will need to make on a regular basis.

Business Decisions

In 2007 Topshop paid the

supermodel Kate Moss £3 million

What are the opportunity costs and trade-offs for Topshop paying Kate

Moss £3 million.

Government Decision

The government raises money through taxation and

borrowing. Decisions need to be made about spending the

money.

The government decides to spend £2 million on

improving the NHS, what are the opportunity costs and

trade-offs.

Revision Essentials Choices – Decisions that need to be

made as a result of having scarce resources.

Opportunity Cost – The value of the next best alternative that has been given up.

Trade-off – The item we have to give up in order to get something else.

TaskMissing Words

Mini case

True/False