There Are Limits
Someone can't afford both concert tickets and new speakers for their car.
What is the scarce resource in this situation?
Money
Working instead of hanging out with friends is an example of this type of choice.
Trade-off
The negative consequence(s) of doing one more of something, like studying one additional hour.
Marginal cost
True or false:
Data can be an important part of economic decision making.
True
This curve shows the maximum output of two goods when resources are used efficiently.
PPC (Production Possibilities Curve)
This condition exists because human wants are unlimited but Earth's resources are finite.
Scarcity
The value of what you give up when you choose one option over another.
Opportunity Cost
The extra gain from doing one more of something, like the grade improvement from one more hour of study.
Marginal benefit
Studying will probably improve my grades, but it's boring. It takes so much time and is difficult, but it makes me smarter.
In this example, I was comparing the _______ and ______ of studying.
Costs and benefits
I want to produce 10 more computers. What is the opportunity cost of going from point A to point B on the PPC curve?
15 phones
Workers and machines operating at full capacity with no wasted time or materials demonstrates this type of resource use / economic idea.
Efficiency
Picking up an extra work shift instead of hanging out with friends; the free time lost represents this.
Opportunity cost
If the extra benefit from one more unit exceeds the extra cost, you should do this.
Continue (the activity)
Money already spent on something that can't be recovered or changed; economists say this shouldn't influence future decision making
Sunk costs
I want to produce 10 more computers. What is the opportunity cost of going from point B to point C on the PPC curve?
25 phones
I want to shift my economy's PPC outward. What should I do?
Teacher approval
Give an example of a non-monetary incentive.
Teacher approval
Marginal benefit and total benefit are always the same
False
Economics relies on 3 ideas:
1) People are (rational / irrational)
2) People ultimately act (seflish / unselfish)
3) People seek to maximize their (happiness / discomfort)
Rational, selfish, happiness
When a nation develops better technology or trains workers with new skills, this happens to its PPC.
(Think: How was output affected by these changes, and how would the graph show that?)
It shifts outward
In choosing what to eat, or how to spend free time... why do people have different opportunity costs?
Im choosing between:
1) Eating pizza
2) Eating Bacon-egg-cheese
3) Eating rotten eggs
I choose to eat the pizza. What is my opportunity cost?
Eating the Bacon-egg-cheese
A city adds a traffic fine that reduces accidents but unexpectedly lowers business revenue nearby; this demonstrates what can happen with public policy.
Unintended consequences
Economists say sunk costs should have this effect on your future decisions.
Ignored / no effect
A nation goes through a recession, its technological and worker production decline, what happens to its PPC.
(Think: How was output affected by these changes, and how would the graph show that?)
It shifts inward (down, left)