Economic Choices

Chapter 1-2
BASIC ECONOMIC
PROBLEM
 The mismatch of UNLIMITED “wants &
needs” and LIMITED “economic
resources”
BASIC ECONOMIC
PROBLEM
 This results from…..
 SCARCITY
SCARCITY means not having enough resources
to satisfy every need.
 IMPACT OF SCARCITY

Countries with limited

education and low skills

People with limited incomes

Poor transportation or Countries with few natural

distribution systems resources
SCARCITY

 Scarcity forces you (people) to make

CHOICES or decisions among the
alternatives.
IMPORTANT TERMS
 Economic Decision-Making
 The process of choosing which wants
among several options will be satisfied.
 Trade-off
 When you give up something to have
something else
 Opportunity Cost
 The value of the next-best alternative that
you did not choose
DECISION MAKING
PROCESS
 1. Define the problem
DECISION MAKING
PROCESS
 1. Define the problem
 2. Identify the choices
DECISION MAKING
PROCESS
 1. Define the problem
 2. Identify the choices
 3. Evaluate the advantages and
disadvantages of each choice
DECISION MAKING
PROCESS
 1. Define the problem
 2. Identify the choices
 3. Evaluate the advantages and
disadvantages of each choice
 4. Choose an option
DECISION MAKING
PROCESS
 1. Define the problem
 2. Identify the choices
 3. Evaluate the advantages and
disadvantages of each choice
 4. Choose an option
 5. Act on your choice & Review your
decision
YOUR ASSIGNMENT

 New/Used Vehicle Assignment