Opportunity cost is the next best alternative you give up when you make a choice, as illustrated in the slideshow below.
A great book to use to discuss opportunity cost is Something from Nothing, a story about a boy named Joseph whose grandfather gives him a blanket when he is born. While you read, have students watch for problem points in the story. When he outgrows one thing, what does his grandfather decide to do?
Each time Joseph and his grandfather make a decision to make something smaller, they give up the opportunity to keep the item as is. As Joseph grows older, so does the blanket so they decide to turn it into something smaller: a jacket. As Joseph grows older, they make more decisions: the jacket becomes a vest, the vest becomes a tie, the tie becomes a handkerchief, and the handkerchief becomes a button.
The Federal Reserve has an interesting lesson plan that focuses on opportunity cost in the story. In the lesson, the students use a piece of paper to represent the blanket. Each time you come to the part where the grandfather's scissors go Snip, Snip, Snip, the students cut out a piece of the paper. Ask them to discuss the opportunity cost-the thing they gave up-when they decided to make something new.
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AuthorDeborah Kozdras, Ph.D. Archives
February 2022
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