ECONOMIC CHOICES

BASIC ECONOMIC PROBLEMS• Unlimited wants and needs vs. limited resources

• Budget cutbacks

• Operating costs do not always keep up with financial limitations

• Scarcity – not having enough resources to satisfy every need

• Some countries do not produce enough resources for their population

• Delivery not always available

CHOICES• Economic Decision Making - Must make smart economic decisions

based on scarcity

• Must budget income based on needs and availability of items

• Decide what is needed and what is a luxury

• Trade-offs and Opportunity Costs –

• Trade-offs – When you give up something to have something else

• Opportunity Costs – Value of the next best alternative (helps control prices, affects decision making process)

THE DECISION MAKING PROCESS• Define the Problem

• Problem must be clearly defined to make a smart decision

• Identify the Choices

• Identify the alternatives to the purchasing choice you will make

• Evaluate Advantages & Disadvantages

• How does purchasing an item affect your life, both positively and negatively

THE DECISION MAKING PROCESS• Choose the Best Alternative

• Select the choice that is the best for you (financially, physically, mentally)

• Act On Your Choice

• Purchasing the item or service

• Review Your Decision

• Review the results of your decision. (buy again, have the service again?)