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ECONOMICS Chapter 1 Funsheet 2 - KEY

Standard: SSEF1 1. A trade-off is the alternative people give up when they make choices. 2. Utility is the benefit or satisfaction received from using a good or service. 3. Self-interest means making a decision that benefits you the most. 4. Benefit means the gain from a decision. 5. Cost means what is given up when a decision is made. 6. A rational decision means making a decision in which the benefits are greater than the costs.

ECONOMICS - A Decision-Making Grid! SWEET!


Directions - Do not write on this sheet. Use your own paper. Label it Chapter 1, Section 2 - Decision-Making Grid. Number your paper 1-7. Here is the scenario: Napoleon has a total of five hours available to work, study, or engage in recreation. Demonstrate that you know how to interpret a decision-making grid by answering the questions below. Interpreting a Decision-Making Grid Decision Making Options Work 1 hour Work 2 hours Work 3 hours Work 4 hours Work 5 hours Figure 1.1 1. According to Figure 1.1, which option leaves the most time for recreation? working 1 hour 2. According to Figure 1.1, which option has the least benefit? working 1 hour 3. According to Figure 1.1, which option leaves the most time for study? working 1 hour 4. According to Figure 1.1, which option has the lowest opportunity cost? working 1 hour 5. According to Figure 1.1, which option will earn the most money? working 5 hours 6. According to Figure 1.1, which option has the greatest opportunity cost? working 5 hours 7. What do we use a decision-making grid for? To help us see what we gain and lose when we have to choose between alternatives at the Margin Benefits 1 hour pay 2 hours pay 3 hours pay 4 hours pay 5 hours pay

Opportunity Cost 1 hour of study or recreation time 2 hours of study or recreation time 3 hours of study or recreation time 4 hours of study or recreation time 5 hours of study or recreation time