What’s
the Cost?
Overview
In economics, opportunity cost is the value of the second-best
choice that is given up or lost when a decision is made.
Opportunity cost can apply to all decisions, not just
economic ones. Decisions, made because of scarcity,
are the basis of this lesson.
Outcome
The students will comprehend the concept of opportunity
cost.
Standards Addressed
Grade 5
Social Studies — Economics, Benchmark A
01. Compare different allocation methods for scarce
goods and services such as prices, command, first-come-first-served,
sharing equally, rationing and lottery.
Grade 6
Social Studies — Economics, Benchmark A
02. Explain that most decisions involve trade-offs
and give examples.
Materials
Procedure
-
Discuss wants, and how people want different things.
Due to the limited factors of production, people
can’t have everything that they want. This
is a problem of scarcity. People make choices based
on scarce resources.
-
Divide students into groups.
-
Give each student a copy of the choice chart.
-
Give each group a problem card. As each group discusses
its problem, each student should fill in the choice
chart by looking at the positive and negative points
of what they choose and the next-best choice —
the opportunity cost.
-
After groups have completed their chart by agreeing
and deciding on their best choice, have a member
of each group read the group’s problem card
and explain how they arrived at their decision.
-
Each student will write a paragraph explaining
how the group’s decision was made and what
the importance is of knowing your opportunity cost.
Evaluation
A two-part evaluation could be used. For Part 1, a participation
score may be assessed as groups work together on the
problem card activity. For Part 2, the opportunity cost
paragraph may be assessed using the following rubric.
Rubric for
Scoring Opportunity Cost Paragraph
| 4 |
The written response
indicates an excellent understanding of opportunity
cost. An accurate description of how to arrive at
an opportunity cost when given more than two choices,
and the importance of knowing your opportunity cost,
are both explained using details. |
| 3 |
The response is adequately developed
and indicates a fairly good understanding of the
importance of knowing your opportunity cost and
how to find the opportunity cost given two choices. |
| 2 |
The response is only partially
developed and indicates some understanding of the
importance of knowing your opportunity cost and
how to find the opportunity cost given two choices. |
| 1 |
The response is only minimally
developed and indicates little understanding of
the importance of knowing your opportunity cost
and how to find the opportunity cost given two choices. |
|
