scarcity, trade-offs, cost, and opportunity cost in economics, society, and government
DESCRIPTION
Scarcity, Trade-offs, Cost, and Opportunity Cost In Economics, Society, and Government. Define Economics- Scarcity- Trade offs- Cost- Opportunity Cost-. Constant Opportunity Cost. Constant Opportunity Cost. PizzaCalzones. Pizza. 10 9 8 7 6 5 4 3 2 1 0. 0 1 2 3 4 5 6 - PowerPoint PPT PresentationTRANSCRIPT
Scarcity, Trade-offs, Cost, and
Opportunity Cost
In Economics, Society, and Government
Define
Economics-
Scarcity-
Trade offs-
Cost-
Opportunity Cost-
Constant Opportunity Cost
Pizza Calzones10
9
8
7
6
5
4
3
2
1
0
0
1
2
3
4
5
6
7
8
9
10
Constant Opportunity Cost
The economy foregoes the same amount of one good when producing more of the other.
Not realistic for entire economy because different resources are better for the production of specific products. This can represent specific products that use the same resources.
PPC 1Pizza
Calzones
1
5
10
01 5 10
Increasing Opportunity Cost
Pizza Computers30
29
24
15
0
0
1
2
3
4
Increasing Opportunity Cost
The value of a foregone product increases as the production of good increases. Specifically relates to the allocation of resources to their best purposes.
Pizza
Computers
5
10
01 2 3 4
15
20
25
30
A
A In this section the best resources at making computers are reallocated to computers and the best at making pizzas stay with pizza
B
B By this point all resources are being allocated to the production of computers, even those resources that least productive at making robots and best at producing pizza.- Common occurrence in Command Economies.
“In all governments, there is a perpetual struggle, open or secret, between Authority and Liberty; and neither of them can ever absolutely prevail in the contest. A great sacrifice of liberty must necessarily be made in every government; yet even the authority, which confines liberty, can never, and perhaps ought never, in any constitution, to become quite entire and uncontrollable.”
- David Hume
“The pursuit of one end necessarily entails opportunity costs in relation to other.”
- Isaiah Berlin British Political Theorist
Can Liberty vs. Authority be viewed in the same manner?
Libe
rty-
(% n
ot d
irect
ly im
pact
ed)
Authority – actions to increase in government power
Opportunity Cost of Liberty and Authority
0
100
80
60
40
20
0No Flag Burning
No Anti Obama speech (bumper stickers, blogs)
No Anti government
speech
No questioning of the
government
Libe
rty-
(% n
ot d
irect
ly im
pact
ed)
Authority – actions to increase in government power
Opportunity Cost of Liberty and Authority
0
100
80
60
40
20
0No Flag Burning
No Anti Obama bumper stickers or public speech
No Anti government speech public
No questioning of the
government
Beware of the Slippery Slope!!!!!
Define
Economics- The allocation of scarce resources that have alternative uses.
Scarcity- having unlimited wants and needs in a world with limited resources.
Trade offs- decision that involves giving up something to gain something else.
Cost- The value of a product’s alternative uses.
Opportunity Cost- highest value alternative given up.
Total Cost= Direct cost (out of pocket) + Opportunity Cost
Constant Opportunity Cost
Pizza Calzones10
9
8
7
6
5
4
3
2
1
0
0
1
2
3
4
5
6
7
8
9
10
Constant Opportunity Cost
The economy foregoes the same amount of one good when producing more of the other.
Not realistic for entire economy because different resources are better for the production of specific products. This can represent specific products that use the same resources.
PPC 1Pizza
Calzones
1
5
10
01 5 10
Increasing Opportunity Cost
Pizza Robots30
29
24
15
0
0
1
2
3
4
Increasing Opportunity Cost
The value of a foregone product increases as the production of good increases. Specifically relates to the allocation of resources to their best purposes.
Pizza
Robots
5
10
01 2 3 4
15
20
25
30
A
A In this section the best resources at making robots are reallocated to robots and the best at making pizzas stay with pizza
B
B By this point all resources are being allocated to the production of robots, even those resources that least productive at making robots and best at producing pizza.- Common occurrence in Command Economies.
Libe
rty-
(% n
ot d
irect
ly im
pact
ed)
Authority – actions to increase in government power
Opportunity Cost of Liberty and Authority
0
100
80
60
40
20
0No Flag Burning
No Anti Obama speech
No Anti government
speech
No questioning of the
government
Increasing Opportunity Cost
Cupcakes TV’s300
290
240
150
0
0
1
2
3
4
Increasing Opportunity CostCupcakes
TV’s
50
100
01 2 3 4
150
200
250
300
A
B