Opportunity Cost Review CHAPTER EIGHT – MONEY MANAGEMENT NOTES

Decisions ... We make decisions every day that have a consequence or a reaction to them. The cost of what we are giving up is our opportunity cost!

Opportunity Cost In choosing the first choice you lost the opportunity to do the second.

Opportunity Cost--Example

Opportunity Cost You got caught up looking at bumper stickers on facebook and sending them to your friends! You were supposed to be finishing up an assignment from Ms. Garrett’s class…

Opportunity Cost Don’t worry! She’ll completely understand why you didn’t turn in your assignment on time! NOT!

Franklin’s Decision Franklin is an eleventh grade student at Enterprise High. He is a solid “B” student with the following options…

Option 1 Take a part-time job after school that pays minimum wage and requires him to work from 4pm until 9pm on school nights. He can buy a used car right now with the extra money he is making and save money for college, but his grades would suffer.

Option 2 Join the football team who has practice every day after school. Franklin loves football. His coach thinks he has a good chance at receiving an athletic scholarship, but his Mom is worried about his grades and the possibility of him getting hurt.

Option 3 Study harder to improve his grades and qualify as a “Student Tutor”. This would give him spending money (not enough for a car) and help him score better on his college entrance exams. Some teachers think he could get an academic scholarship.

What should Franklin do?