文档介绍：2017-6-16 1Opportunity cost and trade Opportunity cost Opportunity cost and trade and trade one do you choose? one do you choose? 2 13 2017-6-16 Which Which opportunity would you choose opportunity would you choose ? ? 2017-6-16 Opportunity cost Opportunity cost Opportunity cost is whatever must be given up to obtain some item. 2017-6-16 face tradeoffs face tradeoffs . . ““ There is no such thing There is no such thing as a free lunch as a free lunch ! !”” 2017-6-16 2 2 . . People face tradeoffs. People face tradeoffs. To get one thing, we usually have To get one thing, we usually have to give up another thing. to give up another thing. u u Guns v. butter Guns v. butter u u Food v. clothing Food v. clothing u u Leisure time v. work Leisure time v. work u u Efficiency v. equity Efficiency v. equity Making decisions requires trading off one goal against another. 2017-6-16 2 2 . . People face tradeoffs. People face tradeoffs. u u Efficiency Efficiency means society gets the means society gets the most that it can from its scarce most that it can from its scarce resources. resources. u u Equity Equity means the benefits of means the benefits of those resources are distributed those resources are distributed fairly among the members of fairly among the members of society. society. Efficiency v. Equity 2017-6-16 3 3 . . The cost of something is The cost of something is what you give up to get it. what you give up to get it. Decisions paring costs Decisions paring costs and benefits of alternatives. and benefits of alternatives. u u Whether to go to college or to Whether to go to college or to work? work? u u Whether to study or go out on a Whether to study or go out on a date? date? u u Whether to go to class or sleep Whether to go to class or sleep in? in? 2017-6-16 3. 3. The cost of something is what The cost of something is what you give up to get you give up to get it it