04 tues oppo costs choices
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Transcript of 04 tues oppo costs choices
Bellringer - in your notebook1. Why did you choose to come to school today?
2. If you weren’t here right now what would you be doing?
Opportunity Cost• Next best option• Example: What you gave up to be here• “I don’t get paid to be here”.
What is economics?• Study of how people
make choices
• You made a choice by coming to class today
• But that choice also has a cost
Economics• People face trade-offs
• Hundreds of choices each day
• Every choice means you refuse something else
• Examples?
Economics as a field
Economics
FinanceIndustrial OrganizationSociologyMarketingPublic ChoiceResource Management
Cousin to Accounting
Combines, history, math, psychology, political science
Economist• A person who studies Economics• Analyze, explain, predict
Ben Stein in Ferris Buhler’s Day Off
Show Dangerfield clip
Economists• Study how
people make choices
• Influential but not always famous
• Only 1 US president with econ degreeAlan Greenspan
Ben Stein
Choice #1Get up when alarm goes off
Choice #2Snooze for 10 more minutes
At least 2 benefits
Check the one you did today
Benefits refused
Choosing is refusing
• Your next best option:• Opportunity cost
• All choices involve cost
4. Household example5. High school example6. Government example7. Other example
Problem for humans• People have unlimited wants
• People have limited resources to get those wants
• We call this problem: Scarcity
Opportunity Cost• What you give up to do something• “The next best option”• For example: If you have $20 in your pocket
and you want to take your BF/GF to the movies, then you won’t have any money left for a new $20 shirt
Source: US Bureau of Labor Statistics
Assuming a person works for 45 years, how much more will the person with a bachelor’s degree make over a person with only a high school diploma?
What’s the other problem for people without high school diplomas?
52 weeks in 1 year
Assuming a person works for 45 years, how much more will the person with a bachelor’s degree make over a person with only a high school diploma?Without: $595 X 52 = $30,940/yr X 45 = $1,392,300With Degree: $962 X 52 = $50,024/yr X 45 = $2,251,080
On average, is it worth it?What’s the other problem for people without high school diplomas?
It depends!
In millions of dollars; based on 1997-1999 work experience
Source: US Bureau of Labor Statistics
Why is this important?
Opportunity Cost• Next best option• Example: What you gave up to be here• “I don’t get paid to be here”.
Tell your partner1. Describe a time you received something for
“free”(What was it, where was it, when was it, quality?)
There Is No Such Thing as A Free Lunch
• Opportunity Cost
• There is no such thing as a free lunch (or breakfast)
• TNSTAFL
In your notesWhat if stuff was “free”?
Create a cost/benefit analysis for each societal choice
1. College is “free”2. Dr. visits are “free”3. Drive on I-10 now $2 each way4. All radio $5/month , like Pandora or
XM5. Music & movie downloads now legal6. Make up one of your own
Benefits Costs
At least 2 At least 2