Opportunity Cost - White Plains Middle School
Opportunity Cost
Economics E. Napp
1) Let’s review:
Can we have everything we want? __________
Why? _________________________________
Define Scarcity: ______________________________________
________________________________________________________
________________________________________________________
2) When making decisions people face trade-offs, or ______________
we give up when we choose one course of action over another.
Give examples of trade-offs:
_____________________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________
We have to make trade-offs because ___________ exists. We __________ have everything we want or need.
3) A country also cannot have everything it wants or needs. A country that decides to produce more ____________ goods has fewer resources to use for __________ goods.
This is called __________ or _______________
4) A person who chooses one alternative gives up other alternatives.
The most desirable alternative given up is called the
________________ _________________.
This means that we give many things up when we make a decision but the best thing we give up when we make a decision is the
________________ ________________.
So, I bought a computer.
I could have used the same money to buy
___________________
___________________
____________________
____________________
Of all of the things I could have bought, the one I wanted the most was the _____________.
Therefore, the most desirable alternative given up for the decision was the
__________________.
This, then, was the _____________ _____________.
5) Sometimes a decision involves deciding about adding or subtracting one additional unit of a resource.
An example of this is studying for the big test!
You have studied for two hours. Now, you are beginning to feel tired. You ask yourself: “Should I study one more hour or should I stop?”
This kind of decision is called ___________ ____ _____ ____________.
Give two more examples of it:
____________________________________
____________________________________
6) Perhaps the most important information we get from the study of opportunity cost is the realization that we always give something else up whenever we get something.
Choosing is refusing.
Therefore, we want to make certain that what we get is better than what we give up. That what we get benefits us more.
In order to ensure that what we get is better than what we give up, it helps to clearly list the decision, the alternatives, and the cost or opportunity cost of the decision. Let’s make such a grid on the board and see how it would help us to make a good decision in this world of choosing is refusing.
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