5 Key Economic Assumptions
1. Society's wants are unlimited, All Resources are limited - Scarcity
2. Due to scarcity, choices must be made. EVERY choice has a cost, or trade off. (part of the opportunity cost benefit idea).
3. Everyone's goal is to make choices that maximize their satisfaction. Everyone acts in their own "self-interest."
4. Everyone acts rationally by comparing the marginal costs 和 marginal benefits of every choice.
2. Due to scarcity, choices must be made. EVERY choice has a cost, or trade off. (part of the opportunity cost benefit idea).
3. Everyone's goal is to make choices that maximize their satisfaction. Everyone acts in their own "self-interest."
4. Everyone acts rationally by comparing the marginal costs 和 marginal benefits of every choice.
Example:
You work Monday through Friday, you make $100 a day. You want to fly out 和 visit a family member for the weekend. Which flight would you choose 和 why? What sort of things do you have to consider?
Thursday night Flight = $300
Friday Early Morning Flight = $345
Friday Night Flight = $380
You work Monday through Friday, you make $100 a day. You want to fly out 和 visit a family member for the weekend. Which flight would you choose 和 why? What sort of things do you have to consider?
Thursday night Flight = $300
Friday Early Morning Flight = $345
Friday Night Flight = $380
All decisions involve trade-offs. Trade-offs are all the alternatives that we give up whenever we choose one course of action over others.
The MOST DESIRABLE alternative given up as a result of a decision is known as opportunity cost.
The MOST DESIRABLE alternative given up as a result of a decision is known as opportunity cost.
At your table, discuss with others what you believe is the opportunity cost of going to college (You have 5 minutes).