ABSTRACT
This chapter introduces the economic concepts of scarcity, trade-off, and opportunity cost, with applications in cost-benefit analyses that offer ambiguity of valuation. The theoretical content of the chapter consists in the graphical and algebraic representation of these fundamental concepts: construction of production possibilities frontiers (PPF), interpretation of their slopes as measurement of trade-offs/opportunity costs, and derivation of the budget constraint as a special case of the PPF.
