Welcome to Economics! Turn your homework into the box Find a
seat where you are free from distractions and be seated when the
bell rings. Turn your homework into the box Find a seat where you
are free from distractions and be seated when the bell rings.
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FOP Quiz
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Do Now Picture yourself walking into the mall. What two things
do you want the most? If you can only pick one, which do you choose
and why? Lets say that you went to the movies with your friends,
bought your ticket but lost it before you got to the ticket clerk.
You have two options: Pay another $10 to buy another ticket Go
home, thinking its not worth $20 to see one movie Which did you
pick and why? Picture yourself walking into the mall. What two
things do you want the most? If you can only pick one, which do you
choose and why? Lets say that you went to the movies with your
friends, bought your ticket but lost it before you got to the
ticket clerk. You have two options: Pay another $10 to buy another
ticket Go home, thinking its not worth $20 to see one movie Which
did you pick and why? 5 minutes End
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Objectives of the day: I can explain opportunity cost in order
to analyze real life trade-offs that we face. I can explain that
rational decisions occur when marginal benefits outweigh marginal
costs in order to evaluate the various costs and benefits of the
decisions that we make. I can explain opportunity cost in order to
analyze real life trade-offs that we face. I can explain that
rational decisions occur when marginal benefits outweigh marginal
costs in order to evaluate the various costs and benefits of the
decisions that we make.
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QOD W HEN YOU HAVE TO CHOOSE BETWEEN TWO THINGS, WHAT DO YOU
MISS OUT ON ?
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Scarcity [Unlimited wants meet limited resources] Making
Choices Opportunity Costs and Trade-offs
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Opportunity Cost: Intro We want a lot of things, but we cant
have them all because there are limited resources on Earth. This is
called scarcity. Because of scarcity we have to make choices. When
you choose one thing, you must give up another. This is known as
the opportunity cost of a decision. This shows how we face
trade-offs every day.
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Opportunity Cost: Definition Opportunity cost is the second
best choice that you give up when you choose something else. If you
choose to spend your money on a new watch, the opportunity cost is
the pair of sneakers you would have bought
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Opportunity Cost: Common Mistakes WHAT IT ISWHAT ITS NOT The
alternative action that you did not choose The negatives of the
action The positives of the action The monetary value ($) of the
action
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Testing Skills: MPQ Practice! Kevin Rose Decides to buy a new
watch. What is the opportunity cost of this decision? a.The
compliments hell receive because of the new watch b.$150, the price
of the new watch c.The new shoes he could have bought instead d.The
gas he had to pay on the way to buy the watch Kevin Rose Decides to
buy a new watch. What is the opportunity cost of this decision?
a.The compliments hell receive because of the new watch b.$150, the
price of the new watch c.The new shoes he could have bought instead
d.The gas he had to pay on the way to buy the watch
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Trade-Offs: A World Full of Choices A trade-off is a situation
where you can get more of one good, but only by getting less of
another Every time you choose one thing over another, you have an
opportunity cost A trade-off is a situation where you can get more
of one good, but only by getting less of another Every time you
choose one thing over another, you have an opportunity cost Pepsi
Co. has $50 million to spend on advertising. They face a trade-off:
should they spend more on TV ads or magazine ads?
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Trade-Offs: Personal Directions: When I say go, rank the
following items in order of preference in your notebooks CD New
Shirt Magazine Movie Ticket Dinner Out Directions: When I say go,
rank the following items in order of preference in your notebooks
CD New Shirt Magazine Movie Ticket Dinner Out
1:000:590:580:570:560:550:540:530:520:510:500:490:480:470:460:450:440:430:420:410:400:390:380:370:360:350:340:330:320:310:300:290:280:270:260:250:240:230:220:210:200:190:180:170:160:150:140:130:120:110:100:090:080:070:060:050:040:030:020:01End1:00
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Trade-Offs: National Budget Directions: When I say go, rank the
following items in order of preference in your notebooks Upgrade
military technology to help the soldiers in Iraq and Afghanistan
Give money to Urban schools to improve graduation rates Increase
funding for Food Stamps for those in need Give basic health
coverage to millions of uninsured Americans Subsidize oil companies
in order to lower gas prices Directions: When I say go, rank the
following items in order of preference in your notebooks Upgrade
military technology to help the soldiers in Iraq and Afghanistan
Give money to Urban schools to improve graduation rates Increase
funding for Food Stamps for those in need Give basic health
coverage to millions of uninsured Americans Subsidize oil companies
in order to lower gas prices
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OC: Case Study With your partner, read the case study circle
words you dont know Star items you think we should spend more on
Discuss answers with your partner and answer the questions in
complete sentences in notebook With your partner, read the case
study circle words you dont know Star items you think we should
spend more on Discuss answers with your partner and answer the
questions in complete sentences in notebook 10 minutes End
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Everything we do has Costs [ Negatives, Disadvantages] Benefits
[Positives, Advantages] There are costs and benefits to everything
we do including learning Economics, eating a burger, driving a car,
asking someone out on a date, or going on vacation. Costs [
Negatives, Disadvantages] Benefits [Positives, Advantages] There
are costs and benefits to everything we do including learning
Economics, eating a burger, driving a car, asking someone out on a
date, or going on vacation.
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Rational Decision Making Rational [using reason] decision
making means choosing to do something only if the benefits of doing
it are greater that costs. Comparing the good and bad things about
a choice is called a cost-benefit analysis. Rational [using reason]
decision making means choosing to do something only if the benefits
of doing it are greater that costs. Comparing the good and bad
things about a choice is called a cost-benefit analysis. You will
only buy an iPad if there are more advantages to having it than
disadvantages.
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Cost-Benefit Analysis: Example Benefits Know the information
better when taking test Higher grade on test Better report card
COSTS Sleepy during the test could hurt test grade Tired in other
classes and cannot concentrate It is 10:30 PM and DeMarcus has been
studying four hours for his Biology final. He needs one more hour
of studying to review every chapter. Should he stay up? He should
only stay up if there are MORE BENEFITS THAN COSTS
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Thinking at the Margin Instead of thinking about the total
costs and benefits, Economists focus on the marginal [additional]
costs and benefits. One washing machine is helpful, but what
benefit would there be to buying two?
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Thinking at Margin: Example Youve just eaten two tacos for
lunch and are trying to decide whether or not to go back for a
third. You want one, but if you get another taco now, you will have
no money left for a juice after school. Are you really that hungry?
You should make a decision only if the marginal benefits outweigh
the marginal costs
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Diminishing Marginal Utility This means that the more you have
of something, the less utility [satisfaction] you get from each new
unit. EXAMPLE: When eating, you feel great at first, but slowly
start to get less and less utility from each bite until you are
full. EXAMPLE: You own a lemonade stand and it starts to get busy.
One extra person helps a lot, but each additional person adds less
and less.
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With Partner With your partner, work on the practice Marginal
cost/benefit questions your answers should be in complete sentences
in your notebook With your partner, work on the practice Marginal
cost/benefit questions your answers should be in complete sentences
in your notebook 10 minutes End
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By yourself Complete the practice questions in your notebook
Silently and independently Complete the practice questions in your
notebook Silently and independently 10 minutes End
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Exit Ticket Clear your desks for the exit ticket Silent and
independent Clear your desks for the exit ticket Silent and
independent