Trade-Off - PowerPoint PPT Presentation

Loading...

PPT – Trade-Off PowerPoint presentation | free to download - id: 83bffa-YTc3Y



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

Trade-Off

Description:

Opportunity Cost Trade Off Definition: a giving up of one thing in return for another All of the alternatives that we give up when we choose one course of action over ... – PowerPoint PPT presentation

Number of Views:18
Avg rating:3.0/5.0
Slides: 17
Provided by: mari7300
Learn more at: http://zajac.cmswiki.wikispaces.net
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Trade-Off


1
Trade-Off Opportunity Cost
2
Trade Off
  • Definition a giving up of one thing in return
    for another
  • All of the alternatives that we give up when we
    choose one course of action over another.
  • Example Buying a car
  • Trade Off - Money cannot be saved or used to buy
    other things.

3
Individual Trade Offs
  • Example Spending more time on homework studying
  • Trade Off Not watching T.V., Talking to
    friends, playing sports etc.

4
Business Trade Off
  • A CEO decides to lay off workers to save money.
  • The desire to make more money is driving the
    decisionWhat is the trade off?

5
Society Trade Offs
  • Guns or Butter
  • If a society decides to produce more military
    goods (guns), it will have fewer resources to
    produce consumer goods (butter).

6
Opportunity Cost
  • Definition The most desirable alternative given
    up as the result of a decision.
  • Example For a consumer with a fixed income, the
    opportunity cost of buying a new dishwasher might
    be the value of a vacation trip never taken or
    several suits of clothes that could not be
    bought.

7
Thinking at the Margin
  • Definition Deciding whether to do or use one
    additional unit of some resource.
  • Example Wake up 1 hour early, get a C wake up
    2 hours early and get a B 3 hours early and get
    an A.

8
Define and give an example of eachPage 153-154
  • Variable cost
  • Fixed cost
  • Total cost
  • Marginal cost
  • Incentive
  • Wage
  • Salary

9
LAW OF DIMINISHING RETURNS
10
What is the Purpose?
  • The Purpose of the Law of Diminishing Returns is
    to measure how efficient a business is making a
    product, not necessarily how much of the product
    they make?
  • Is there a difference between output and
    efficiency?

11
Hypothetically????
  • If I assigned you the task of creating a booklet
    of information and gave you the following
    instructionshow many people would be needed to
    EFFICIENTLY complete the task?
  • You are to take two pieces of paper, each with
    printed information about the CE Course, sort
    them into piles, staple them together and then
    stack them in a pile.

12
  • Law of Diminishing Return
  • Level of production in which the marginal product
    of labor decreases as the number of workers
    increase

13
  • Marginal Product of Labor - The "marginal
    product" of labor (MPL) is defined as the change
    in total product from expanding labor input by
    one unit while holding capital constant.
  • The "law of diminishing returns" states that
    adding additional amounts of labor to a fixed
    amount of capital will eventually reduce labors
    marginal product.

14
Locate these points on the chart
  • Efficiency
  • Underutilization
  • Maximization of output

15
Example
Labor ( of Workers) Output Marginal Product of Labor
0 0 -
1 4 4
2 10 6
3 17 7
4 23 6
5 28 5
6 31 3
7 32 1
8 31 -1
16
  • Fixed Costs
  • Do not change regardless of how many goods are
    produced
  • Fixed interest rate
  • Variable Costs
  • Costs that vary when the amount of products that
    are produced change
  • Variable interest rates
  • Total Costs
  • Add the variable and fixed together
About PowerShow.com