lesson 1 module 2: trade-offs and opportunity costs

John goes to the movies on Friday night and pays $10.00 for a ticket. If John had worked instead he could have earned $40.00. What is John's opportunity cost of going to the movie?

$50.00

The PACED decision-making model provides a ____________ step structure for making choices.

5

MODULE CHECK

MODULE CHECK

Applications for graduate schools usually increase when there is _______________ .

a decrease in available jobs

PACED decision-making model

a five-step procedure that provides a structure for making decisions- helps people evaluate options before making a decision

The first step in the PACED decision making model is to _______________.

define the problem

When thinking about opportunity costs, we only consider money.

false

scarcity

leads to trade-offs

Opportunity costs include _______________.

money, time, and experiences

When using the PACED decision making model you should choose the alternative with the highest ______________ .

net value

_______________ is the value of the best alternative given up when a choice is made.

opportunity cost

Points ___________ the production possibilities curve represent combinations of goods that cannot be produced with the amount of resources and level of technology currently available.

outside

A ______________ shows the maximum combination of two goods that can be produced when all resources and the best technology is used.

production possibilities curve

opportunity cost

the value of the next best alternative other than the choice that was made (money, time, or experiences) (basically the cost of the thing that you gave up)

If you attend a small, private college you will likely have smaller class sizes but pay higher tuition. This is an example of a ____________________.

trade off

A __________ is when you sacrifice something in order to gain something else.

trade-off

Because of scarcity everyone, even billionaires, face trade-offs.

true

Sports stars that have the ability to be successful in professional sports have a higher opportunity cost of attending college than typical students.

true

scarcity forces you to make choices

understanding opt costs can help you make a better, less obvious decision

You are making a choice between four different alternatives. The opportunity cost of your choice is _______________ .

value of next best alternative

trade-off

when you give something up to gain something else