THE TEN PRINCIPLES OF ECONOMICS

Principle #1:
People Face
Tradeoffs
 Group Members:

Kenneth R. Castro Christian Van Farrah Mae Domdom

James Bryan Cejas Justine Melano
Alyssa Nicole Castro Jhornie Agular Sarah Villasin
 What is ECONOMICS

Economics?
Economics is the study of how society manages
its scarce resources

ECONOMY

The word economy comes from the Greek word

for “one who manages a household”

“ECO” means HOME

“NOMOS” means ACCOUNTS

Principle #1: People Face Tradeoffs

“There is NO such thing

as a Free Lunch”
What is a tradeoff?
In economics, the term trade-off is often expressed as an opportunity cost,
which is the most preferred possible alternative.

A trade-off involves a sacrifice that must be made to get a certain product or

experience.

Example:

A person gives up the opportunity to buy 'good B,' because they want to buy
'good A' instead. For a person going to a baseball game, their economic trade-off
is the money and time spent at the ballpark, as compared to the alternative of
watching the game at home and saving their money, plus the time spent driving to
the ball game.
Making decisions requires
trading off one goal
against another.
WORK/STUDIES & LEISURE
FOOD & CLOTHING
ACTIVITIES
Different Kinds of
Tradeoffs
EFFICIENCY AND EQUITY
Efficiency - society is getting the most it can from its
scarce resources.
Equity - benefits of those resources are distributed
fairly among society’s members.

THE CLASSIC - “GUN & BUTTER” In other words, efficiency

refers to the size of the
The more we spend on national defense to protect our
economic pie, and equity
shores from foreign aggressors (guns), the less we can
refers to how the pie is
spend on consumer goods to raise our standard of
living at home (butter). divided.
Recognizing that people face tradeoffs does not by
itself tell us what decisions they will or should make.

A student should not abandon the study of

01 psychology just because doing so would

increase the time available for the study of
economics.

Society should not stop protecting the

02 environment just because environmental

regulations reduce our material standard of living.

03 The poor should not be ignored just because

helping them distorts work incentives.
Principle #1: People Face Tradeoffs

Acknowledging life’s tradeoffs is important

because people are likely to make good
decisions only if they understand the options
that they have available.
 Thank you!
DO YOU HAVE ANY FOLLOW-UP QUESTIONS FOR GROUP
A?
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Student
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Use these icons and illustrations in

your Canva Presentation.
Happy designing!