SS: Economics Ch. 1, Lesson 2: Opportunity Cost
Which of the following is a "guns or butter" decision?
A country must decide whether to use its steel to build new fighter jets or new sports cars.
Trade-Off
An alternative that is sacrificed when a decision is made.
What is a trade-off?
An alternative that we sacrifice when we make a decision.
Why does every decision involve trade-offs?
Because everyone has to make sacrifices.
Which of the following is an example of thinking at the margin?
Deciding whether the benefit of working two extra hours per day is worth the sacrifice of study time.
Thinking at the Margin
Deciding whether to do or use one additional unit of some resource.
Which is not a trade-off for students who spend a semester abroad?
Experiencing the culture of another country.
The government of a country must decide between increasing military spending and subsidizing wheat farmers. This kind of decision is a _________
Guns or Butter issue.
What can a decision making grid do?
Help you determine the opportunity cost of your decision.
Guns or Butter
Phrase that refers to the trade-off that nations face when choosing whether to produce more or less military or consumer goods.
A decision is made at the margin when each alternative considers ______
The cost and benefit of each extra unit.
Opportunity Cost
The most desirable alternative given up as the result of a decision.
What is the opportunity cost of a decision?
The most desirable alternative given up as the result of a decision.
Which is not a type of decision that can be made at the margin?
Whether or not to go on a vacation.
