Economic Choices

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Economic Choices

• To choose or not to choose

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Economic Choices

• Why do we have to make choices?
• because of scarcity, we can not have everything
  we want

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Economic Choices

• What makes choosing difficult?
• some of our choices are in direct conflict with
  each other
• -ex. society wants to drive big SUVs but they
  also want to use less gas

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Economic Choices

• What are trade-offs?
• the choice between alternative uses for a given
  quantity of a resource
• ex. Friday night we want to go to the Jamboree
  and go to a concert. They are both at the same
  time. How do we decide?

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Economic Choices

• What is opportunity Cost?

• real economic cost of a good or service produced
  measured by the value of the sacrificed
  alternative
• this is the idea of comparing the two choices to
  find out what is lost and what is gained

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Economic Choices

• What is opportunity Cost?

• we often do this at a subconscious level
• ex. we do not stand in the cafeteria and right
  all the pros and cons of the burgers or the salads

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Economic Choices

• What are the three basic economic questions?

• What to produce?
• this is done in the free market
• this determines what mix of goods and services
  will be allocated

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Economic Choices

1. What to produce? (continued)

ex. The milk vending machine -Chocolate
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Economic Choices

• 2) How to produce?

what method of production -does it need to be
fast/or mass produced/does it need to be a very
high quality -what combination of resources are
needed -how will the infrastructure be
used -the stock of an economys capital
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Economic Choices

• 3) For Whom to produce?

• This determines how much of what is produced
• -ex. Porsche Carrera GT 440,000

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Economic Choices

• What role does culture play?

• This determines what is important or valued by
  the society
• -ex. Clean air

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• What are societys economic goals?

• Efficiency
• -getting the most out of our resources
• -using the least amount of resources to make
  the most
• -use limited resources for the most important
  purposes

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1. Efficiency (continued)

-By improving technology we should be increasing
efficiency -ex. Japan following World War II
dumped all of their technology development into
civilian areas. They became a world leader in
efficiency.
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• What are societys economic goals?

2) Stability

• The avoidance of rapid changes in the general
  price level of goods or services
• This should reflect production costs and demand
  for the item

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• What are societys economic goals?

2) Stability (Continued)

• Inflation, the quick continuous rise of the
  general price level, destroys price stability
• This is caused by sudden changes in the country
  or world

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• What are societys economic goals?

3) Full employment

• This is nearly everyone that wants to work has a
  job
• In practice an unemployment rate of around 4-5
  is considered full employment

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• What are societys economic goals?

4) Growth

• all the other factors contribute to growth
• this is an increase in the production capacity of
  the economy

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• What are societys economic goals?

4) Growth

• There are many theories on how to facilitate
  growth
• decreasing the deficit
• increasing tax breaks for new businesses
• improving the countries infrastructure
• more government spending