1. Opportunity Cost
Day 2: Practice

2. Today’s objective After today’s lesson, students will be able to…
Identify opportunity costs correctly
Essential Skill:
Demonstrate understanding of concepts

3. Discussion What were the considered alternatives in your choice?
If someone made a different choice than you did, did one person make the right choice and one the wrong choice?
Suppose an ice cream bar is included as an alternative along with two types of candy.
Would your opportunity cost have changed? Why or why not?
What is the opportunity cost to the person who chose the ice cream bar from among the 3 options?
What is the opportunity cost to someone who sticks with their original choice when the ice cream bar is included in the alternatives?

4. Discussion Continued
Suppose the “rules of the game” had been that the class could choose one snack, and the choice was Candy A.
Does that configuration of the situation change the opportunity cost?
Suppose all 4 types of snack had been on one table and everyone could select from the table.
Would that change your opportunity cost? Why?
Is the availability of a great number of alternatives likely to increase or decrease opportunity costs? Why?

5. Opportunity Cost Costs are to People Only actions have costs
All costs are costs to the decision-maker
All costs are subjecitive
Only actions have costs
“Things” have no cost independent of decisions about their use
All costs lie in the future
The anticipation of future consequences shapes peoples’ choices

6. Practice Work with the person next to you
Identify the opportunity cost in each situation

7. Opportunity cost analysis
Get into groups of 3-4 people to complete the sheet
Can you figure out why the person perceives a lower/higher opportunity cost?
Why is the person doing something that doesn’t seem to make sense to us
Be as detailed as possible in explaining how opportunity cost affects the following behaviors

8. Conclusion
We are forced to make _________ because of ________. When we make these ________ we incur an ___________
Work on the module 1 review!