Hone

Lessons · Teaching · scarcity, and the cost of every choice

Every choice costs the thing you did not choose

Scarcity means wants exceed the resources available, so choices must be made. The opportunity cost of a choice is the best alternative given up. Needs are what is required to live; wants are everything else, and the line between them is not always obvious.

Hone is a place to practise a career, one idea a day. This is one of its lessons, written out in full and free to read without an account.

In beta. This lesson was written for Hone and has not yet been checked by a state certification officer. Practice material, not professional advice. What that means.

What it is for

Opportunity cost is the one idea from economics that a ten-year-old can use the same afternoon, on pocket money or on a free hour. It is also the most examined concept in elementary economics, and it is about what was not chosen, which children find genuinely surprising.

How to think about it

For every choice, name what was given up, not merely what was chosen. The opportunity cost is the single best alternative, not all of them added together. Distinguish needs from wants by asking what happens without it.

Worked example

Scarcity: there is not enough to satisfy every want, so something must be chosen
It applies to time and attention as much as to money.
Opportunity cost: the best thing given up, not the list of everything given up
One alternative, the next best, and naming it is the skill.
Spend an hour on football and the cost is the reading you did not do
Time is the resource children understand scarcity in first.
Needs are required to live: food, water, shelter. Wants are everything else
The line is examined and it is less obvious than it sounds.

Your turn

Name the best alternative given up when a choice is made.

The best alternative given up is the  cost

The trap

Adding up every alternative as the cost. The opportunity cost is the single next-best option, because that is the only one you could actually have had instead.

Next in Teaching

Every Teaching lesson on one page

Practise scarcity, and the cost of every choice on HoneA question on it now, a real problem where there is one, and it is remembered for review. Free, no email needed.