Prepared by:

ERROCEL SHANE D. BELLEN, LPT

JHS & SHS Teacher
 BASIC ECONOMIC CONCEPTS FOR WISE DECISION-MAKING

OPPORTUNITY COST

If we make a choice "choose A" because things are scarce, you affect other things "give up B, C, D"
-Remember the big thing here is the cost/benefit analysis
-Your opportunity cost in a situation is the value of the most desirable alternative you gave up when you made your
decision

TRADE-OFF
A trade-off (or tradeoff) is a situational decision that involves diminishing or losing one quality, quantity, or property of
a set or design in return for gains in other aspects.

The concept of a tradeoff suggests a tactical or strategic choice made with full comprehension of the advantages and
disadvantages of each setup.
A tradeoff, then, involves a sacrifice that must be made to obtain a certain product, service, or experience, rather than
others that could be made or obtained using the same required resources.

MARGINAL THINKING
Thinking on the margin or marginal thinking means considering how much you value an addition of something. You
ignore the sunk costs of what’s already going to happen, and weigh up the costs and benefits of adding in something
extra (extra work, money, bananas etc.). Economic principle: Rational people think at the margin
The third of Mankiw’s four principles of economics, states that ”rational people think at the margin”:

“Rational people systematically and purposefully do the best they can to achieve their objectives, given the
available opportunities.” Principles of Macroeconomics 6th Ed. at 6

INCENTIVES
Incentives are benefits or costs of an action that influence people's decisions and behavior.
Inflation rate slowed down further to 4.7% in July 2023, from 5.4% in June. This
is the sixth time that inflation eased since its peak of 8.7% in January 2023.
 Explain the concepts and evaluate how these concepts affect the
social and economic factors in the country such as income,
education, employment, community safety, and social supports
as income, education, employment, community safety and social support.