Economics Is Everywhere 2

Course Name:  Economics, Social Studies

Unit Title:          Getting Started with Economics: Economics Is Everywhere!

Lesson Title:      Lesson 2: ALL CHOICES  INVOLVE COSTS

Grade Level:     4-8

Duration:            50 minute session each for lesson

Standards:         This lesson incorporates Voluntary National Content Standards in Economics and Michigan Content Standards and Benchmarks for Economics.  See listing of National Standards and Benchmarks at end of lesson.

Social Studies, Economics Key Words and Concepts:  barter, benefits, capital resources, choice, consumer, corporation, cost, distribution, economics, economic wants, entrepreneur, exports, goods, human resources, imports, incentives, individual ownership, interdependence, interest, investing, market economy, market, money, natural resources, opportunity cost, partnership, price, productive resources, productivity, producer, profit, savings, scarcity, services, specialization, supply and demand, surplus, taxes, trade, trade-off.

Purpose: 

These introductory economics lessons will introduce students to the “economic way of thinking” by examining the first three of the Six Core Economic Principles, otherwise known as The Handy Dandy Guide, or HDG, in three sessions of approximately 50 minutes each.  One Economic Principle and a round of EconAround Bingo will be featured in each session.  The Core Economic Principles will be directly related to 40 essential economic vocabulary words and concepts.   The learner will be introduced to the principles with examples from everyday life and learn how to use the appropriate economic vocabulary to explain these economic principles at work in their world.

Objectives: 

The learner will:

• Define and explain the Six Core Economic Principles
• Analyze everyday life and current events to explain how economic principles can be applied
• Define basic economic vocabulary terms and concepts and apply them correctly in explaining economic principles

Day Two, Principle 2, All Choices Involve Costs,  and Round 2 of EconAround Bingo

Materials

• Overhead transparency of the Six Core Economic Principles
• Overhead transparency of EconAround  Bingo Vocabulary List
• Teacher copy only of EconAround Bingo Game Sequence sheet
• EconAround Bingo game cards from deck
• All previously used EconAround Bingo game sheets from Round 1.  Students may trade these amongst themselves, modify their “old” bingo sheet by erasing and replacing words in the boxes, or develop a totally new bingo sheet.
• EconAround Bingo Vocabulary List. Students should use their same highlighted  vocabulary list used in Round 1 of the game.
• The Six Core Economic Principles mini-poster.  Students should retrieve copy given to them in Round 1 and keep on their table surface with their  EconAround Bingo Vocabulary List, EconAround Bingo game sheet, and any EconAround Bingo game cards they receive.
• Bingo tokens, 10 per student
• Highlighters, one per student or share
• Pencil
• 5 “desirable items”, such as candy bar, granola bar, juice, pocket calculator, marker or highlighter, colorful pencil, folder, stickers, etc.)

Instructional Procedures:

Anticipatory Set:

1. Using The Six Core Principles overhead transparency, cover the text portion with paper to reveal only the 6 graphic images on the poster.  Make them as big as you can on the projector screen so all can see. Pick any  principle, but not Principle 1 to start, read it aloud. Ask for volunteers to specify which picture or graphic best describes the Economic Principle you just read.  Ask each respondent to explain what characteristics of the picture relate to the principle.
2. Next, enlarge the graphic for Principle #2 as large as possible while still keeping the focus. Explain how the graphic shows that by choosing one thing, such as education in this example, you necessarily have to give up some parts of other thing, such as housing or transportation.  Most economic decisions are not “all or nothing” decisions.  They usually involve making a trade off, giving up a little of one thing in order to have more of one or more other things.  Explain to students that by choosing education in this graphic, the girl may have to give up some things in terms of housing and transportation.  She just  can’t “have it all”.
3. Write “There’s no such thing as a free lunch.” on the board or overhead. Ask students to suggest what is meant by this statement. (Encourage all responses that point to costs, monetary or non-monetary, small or large, that might accompany any decision. Students seem to think that costs have to involve money, but time or lost opportunities can also be costs as well.)
4. Ask students to get out their Vocabulary Lists and Six Core Economics Principles mini poster and arrange on their desk.  Tell them to mark a number “2” next to all words that you will be discussing relating to Principle #2.
5. Introduce Principle #2: All Choices Involve Costs. Ask students to read aloud the principle and subtext. Ask students to examine closely the graphic showing the girl who is choosing the card representing education and leaving behind the two cards representing a car and a house. Tell students that since we can’t have everything we want, choosing one thing means giving up something else, or simply put, choosing is refusing.  “There is no such thing as a free lunch”, since every action costs someone time, effort or lost opportunities to do something else. We are always confronted with scarcity because we as consumers and producers may have many different goods and services to choose from, but only so many productive resources, such as limited income, or time, to enjoy them or use them.  Every choice or decision we make has an opportunity cost, the next best single alternative we give up.  If you pay an opportunity cost to use a good or service, it is scarce. People incur costs when making decisions even when people appear to pay nothing.  (You may also use the Door 1, Door 2, and Door 3 graphic from Principle #1 to reinforce the idea that choosing any door has a cost, the lost opportunity to choose a different door.)
6. Write the term opportunity cost on the board.  In the graphic from above, ask students if the girl chose education, how would we know what her opportunity cost was?  Was it the car or was it the house? (Answers should suggest that we would not really know.  Only the girl would know what her second best choice would be.) We would not know her true opportunity cost of choosing education unless we knew what she thought the next best single alternative was, either a good car or a good house.  Let’s say, for example, that for this girl, the opportunity cost of choosing a good education was a car. The house was important, but if she had to choose, the car would be the next best alternative she would pick if she could not choose the education. If the house was her second best alternative, the house would have been her opportunity cost in that case.
7. Suggest to students that often in life we choose to give up a little of one thing in order to get a little more of something else. This is called a trade off.  A trade off is a type of choice too, and involves thinking about benefits, costs (not just monetary costs!), and opportunity costs.  In any decision to give up something in exchange for getting more of something else, we are thinking about “opportunity lost” of our next best alternative, which is another way of saying opportunity cost.  We are also considering the benefits of receiving a little more of something we want.  We make these trade offs every day and in most every way.  It is possible that the girl in the graphic could trade off a good car and a house for a “not so good car” and “not so good house” and still keep her choice of a good education.  Her opportunity cost might still be the car, but she can adjust her choices so it is not an all or nothing result and make a trade off.  It is also possible that she could do less education (say, part time, or less expensive school) and try to have a little nicer car.  Her opportunity cost is the good car if she chooses education, but she lessened the all or nothing impact by making a trade off.   Life is full of these trade offs.  Choosing to do any one thing is still refusing something else.
8. Tell students that the choice you made to come to school today had an opportunity cost and that the opportunity cost is different for everyone in the room because we all see and value things differently.  Ask the students what their opportunity cost was for coming to school today. Ask for some volunteers to share a choice they made today and their opportunity cost.  (If the choice involves choosing among competing alternatives, be sure to remind students that opportunity cost is only the cost of the next best alternative given up, not the sum or everything they have given up.  This is a very important distinction to make.)
9. Place five “desirable” items in front of the class.  Ask for a volunteer to choose the best two items of the five that they would really want.  Now ask the student to choose which one of the two things that would bring the most benefit to them.  Ask the class “What is the opportunity cost of this choice?.”  (Answer: The next best alternative, the second best choice given up is the opportunity cost, not the sum of all the alternatives that were passed up)
10.  Ask students to share which words they labeled with a number “2” with All Choices Involve Costs.  (Words should include choice, cost, opportunity cost, trade off, benefits, consumers, producer, goods, services, productive resources).  Other words can be used if students connect it in some logical way with this principle.  For example:  Saving is related to Principle 2, because if you choose to save, you give up the next best opportunity or alternative for the money you saved. So, deciding to save has an opportunity cost as well. It would be the next best alternative you would have chosen for the money if you did not save it.)
11. EconAround Bingo: Round 2  Tell students that in playing Round 2, you would like to see if the class can reduce the time it takes to play from Round 1.  Remind them of how long the first time took and see if you can set a goal to reduce it by a third or more.
12. D istribute the completed EconAround Bingo sheets from the first round to their original creators.  Allow a minute for anyone to trade with someone else if they wish before play begins and while Bingo tokens are distributed.
13. When ready, teacher may start the game, just as in Round I with the “Who has….” lower portion of the  “I have incentives.” card or with any other card in the deck.  The teacher may also choose to give up his or her starter card and have students in total control of all the cards and just choose a person to start the game. Wherever the game starts, it will come back eventually to the person who started it if all the cards are distributed and everyone does their job.
14. Play Round II and record time elapsed for this round.  Try to restrict any comments or interruptions unless necessary and see if the students can smoothly conduct the game in less time.  Pause, as needed, to make sure everyone is getting their Bingo tokens properly posted.  When Bingo is announced, check over the winning Bingo sheets to make sure all the words in the row being claimed have actually been properly responded to thus far in the game. Start over with clean Bingo sheets after 1-2 winners per Bingo sheet as in Round 1. 
15. Important note for teacher: It is very handy to keep your EconAround Game Sequence sheet with you at all times while the game is being  played so you can keep track of words already announced in each Bingo round and prompt responses and coach as needed if you know what word is coming next in the sequence.
16. Important: Collect all EconAround Bingo game cards, making sure you have all that were   handed out!  Also collect and store EconAround Bingo game sheets, and all Bingo tokens.  Students should also keep (or collect and store) their own  EconAround  Bingo Vocabulary Lists and Six Core Economic Principles mini-poster handouts for the next lesson.  Make sure students have labeled each sheet with their name and that all these papers can be retrieved easily for Lesson 3.
17. Debrief of Round 2  Refer to an overhead transparency of The Six Core Economic Principles as you discuss what students have learned today.
    • Compare Round 1 with Round 2.  What differences, if any, did you note?
    • Without looking at your Vocabulary Lists, what economic vocabulary words can be linked to describing Principle #2?  Explain how or why they relate to this principle.
    • Ask students to identify three goods that they most want and would be willing to trade for.  Then ask individual students to explain what their opportunity cost would be if they made a first choice.  (The opportunity cost will be the one good that was their second choice)Compare Round 1 with Round 2.  What differences, if any, did you note?

Assessment:

 Ask students if they think Principles 1 and 2 really qualify as principles in the sense of explaining behavior and being true for people in general at any time.  Can they think of any situations where these two principles do not really apply?  Ask students to support their arguments with examples or evidence either way they state their position.

1. Draw a sketch, graphic, or cartoon of Principle 2 that captures the idea that All Choices Involve Costs.  Explain how your picture demonstrates opportunity cost.
2. Individually develop a solution to a problem that affects everybody in the class and identify the opportunity cost. Compare the solutions and explain why solutions and opportunity costs differ among students.
3. Describe a situation that requires a choice, make a decision, and identify the opportunity cost.

Michigan Social Studies Content Standards/Benchmarks Addressed in Lesson 2:

Economics Is Everywhere 3