Download opportunity cost - BTHS World History

Opportunity Cost
The opportunity cost of a choice is the value of the
next- best alternative given up when that choice is
made.
Opportunity Cost
Simulation
Economics Models
Economists use modeling to simplify
reality.
Models help to focus on selected aspects
of the real world by stripping away
nonessential details.
Economics Models
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Uses of models include:
Describing relationships
Forecasting economic activity
Proposing economic policy
Presenting reasoned arguments to justify
policy
Planning and allocation
Commonly described as establishing
argumentative framework for applying logic
and mathematics
Creating Economic
Models
The Production Possibilities Frontier
A production
possibilities frontier, or
PPF, is a curve that
shows the maximum
quantity of one good
that can be produced for
each possible quantity of
another good produced.
Efficiency and Growth
An economy is
efficient if there is no
opportunity to make
someone better off
without making
anyone else worse off.
Opportunity Costs for Society
Opportunity Costs for Society
The law of
increasing
opportunity cost
states that the
opportunity cost
of a good rises as
more of the good
is produced.
Efficiency and Growth
Economic growth is an increase in the ability to
produce goods and services over time.
Microeconomics
Macroeconomics
The study of how people
make decisions and how
those decisions affect
others In the economy.
The study of the
economy as a whole.
Microeconomics
Example Topics:
- Profits
- Markets
- Pollution
Macroeconomics
Example Topics:
- Inflation
- Interest rates
- Government spending
Positive Economics
Normative Economics
Positive economics is the
study of what the world is like
and why it works the way it
does. It is about facts and
cause- and- effect
relationships.
Normative economics is the
study of the way things
should be rather than the
way things are. Normative
economics brings opinions
and ideals into the process of
answering questions.
Positive questions include:
• How many teenagers live in
poverty?
• Do people buy more or less
Coke when their incomes
increase?
Normative questions include:
• Should our country do
more to help the poor?
• Should college athletes be
paid to perform?