Opportunity Cost Grade Three

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1 Ohio Standards Connection: Economics Benchmark A Explain the opportunity costs involved in the allocation of scarce productive resources. Indicator 1 Define opportunity cost and give an example of the opportunity cost of a personal decision. Lesson Summary: The purpose of the lesson is to introduce students to the term opportunity cost and connect it to their lives. Students will be led through a series of steps that will help them identify the opportunity cost of their decisions at the end of the lesson. Students will rehearse the definition of opportunity cost and review the concept of scarcity. At the end of the lesson, students will write a story about a time they had to decide between several equally desirable choices. There is also a follow-up journal assignment. The lesson is simple to do and connects to the students background knowledge. Most third-grade students should be able to participate with a minimum of modification. Estimated Duration: 50 minutes Commentary: Since students face many choices every day, it is important for them to be able to explicitly compare the value of alternative opportunities that are sacrificed in any choice involving the use of resources such as time or money. This lesson will help them understand the consequences of their choices, which should lead to a heightened sense of responsibility and accountability. The following is a comment from a teacher who participated in the pilot of the lesson, My students were more aware of the times they had to make choices resulting in opportunity costs. They seemed to take the decisions they made more seriously. Pre-Assessment: Have the students complete the pre-assessment independently or read aloud the pretest to the students. Allow ample time for students to complete the chart and answer the questions on Attachment A. Scoring Guidelines: Answer C is the correct response for the multiple choice question. Use the pre-assessment information to determine students concept of opportunity cost and its definition. 1

2 Post-Assessment: Have the students complete a story identifying the opportunity cost. Guidelines for students are provided on Attachment B. Have students brainstorm some ideas for writing such as: There was a time when you had the chance to do four really fun activities, but you could only do one. You have only enough money to buy one item, but you really would like to buy several items. Think about a time when supplies were scarce. You have one TV, but everyone in the family wants to watch a TV program at the same time you do. Post the ideas on chart paper or on the chalkboard and have students pick an idea from the list or choose something else of their own and begin the writing process. Tell students: "Your story needs to describe the choices you had when making your decision." Scoring Guidelines: Rubric for Story 2 points: A detailed description is given of a time when the student had to make a choice where all choices seemed to be worthwhile. The explanation clearly states an understanding of the concept of scarcity and it correctly identifies the opportunity cost. 1 point: A description is given of a time when the student had to make a choice where all choices seemed to be worthwhile. The explanation does not state an understanding of the concept of scarcity and it does not identify the opportunity cost. 0 points: No description of a decision is given. Instructional Procedures: 1. Tell students the following story: You are looking through a catalog trying to decide how to spend the $50 you received for your birthday. Write a list on the board or overhead of what you saw that you would like to buy. Explain that you do not have enough money to buy everything on the list. 2. Ask students to help you decide what to do and lead a discussion based on their suggestions. 3. Have students get out a piece of notebook paper or plain white paper. Have them fold the paper into fourths. Then have them open the paper. Tell students to note the four rectangles or quadrants. Have the students label the upper left-hand rectangle with a number 1, the other upper rectangle with a number 2, the lower left rectangle with a number 3 and the last rectangle with a number Introduction: Write the words opportunity cost and scarcity on the board or overhead transparency. Read the words to the students or have the students read them to you. Ask students if they know what those words mean. Have the students write opportunity cost and scarcity in rectangle 1. Check to see if each child knows where to begin. 5. Tell the students at the end of today s lesson they will know what opportunity cost and scarcity mean. 2

3 6. Say: In rectangle two, I want you to write a list of seven to 10 activities that you would really like to do with a friend. Allow three to five minutes for students to complete their lists. Say: Now your friend can only do three activities on your list. Have the students circle in green their three favorite activities on the lists. Explain to the students that they cannot have everything they want in rectangle two because resources and time are scarce. 7. To elaborate on the concept of scarcity, provide the students the following example: You go to the store and there are two toys that you would like to buy. Each toy is five dollars, but you only have enough money to buy one of them. You have to decide which toy you like best because for your money is scarce. Or discuss the time when popular toys were scarce in stores due to low supply and high demand. 8. Have the students write their three green-circled activities in rectangle three. Say: At the last minute your friend tells you he/she only has time to do one activity in rectangle three. Have the students look at the three activities closely and put a number one next to the activity that they would like the most and a number two next to their second best choice. Have them write the activity with a number two next to it at the top of rectangle four. 9. Explain to students that because time was scarce their friends could not do everything they planned. Therefore; they had to make choices among three favorite activities. The next best activity they gave up is called opportunity cost. Have the students write the word opportunity cost and its definition in rectangle four (opportunity cost is the value of the next best alternative given up when a choice is made - see the standards document's glossary for this definition). Discuss with the students the criteria used in making their decisions. 10. Have students practice the Pass the Question strategy: One student recites the statement, then the next student to the right or left of the first student recites the statement until everyone in the room has recited the statement. 11. Have a student complete the following sentence and recite it to the person sitting next to him/her (choose left or right): My favorite activity was. My opportunity cost was. Then that person recites the sentence to the person sitting next to him/her. The question passes around the room until everyone has said the statement to someone else. 12. On the backside of the four-rectangle page, have the students complete this statement in writing: My favorite activity was. My opportunity cost was because that activity was the next best choice. 13. Discuss with students that there is always an opportunity cost when making decisions because resources are limited or scarce. 14. Have students do the following activity as a journal entry or writing assignment the next day. Ask students to think of four or five gifts they really want, but tell them they can only have one. Have the students identify their favorite gifts and their opportunity costs, and explain their answers. 3

4 Differentiated Instructional Support: Instruction is differentiated according to learner needs, to help all learners either meet the intent of the specified indicator(s) or, if the indicator is already met, to advance beyond the specified indicator(s). Any student who demonstrates mastery on the pretest can make a list of all the decisions he/she made that day or the day before. Give examples of some decisions a student could have made such as what to eat for breakfast, what clothes to wear, who to play with at recess, what book to read, who to sit with at lunch, and etc. Students will have a list of all the decisions they make in a day. Next, have students select three decisions that were the most difficult to make. Have students write paragraphs explaining why the decisions were difficult and what the opportunity costs were for each decision. Some students may have difficulty writing a list of seven to 10 activities. A minimum of three activities would be sufficient to continue with the activity or students could choose from a generated list. Instead of a journal entry in the follow-up step, have each student tell a story or create a picture board to explain the concept. For the post-assessment, instead of the teacher reading the stories, have the students read aloud the stories in small groups. Have students choose one story other than their own to use when answering the prewriting questions. Have students create a picture book similar to a comic book. Extensions: The concept of opportunity cost should be reviewed regularly. Be aware of teachable moments when an example of opportunity cost arises in your classroom or school. Another suggestion would be to periodically assign entries for journals describing situations where students had to make choices and can identify the opportunity costs. Third graders can easily grasp the concept of opportunity cost, but need help with the vocabulary. Create a bar graph of pre-assessment results. Provide students with the results of how many students chose going to a birthday party, seeing a movie with a friend or spending the night with their grandparents as their first choice. Graph the results using a bar graph. Interdisciplinary Connections: English Language Arts Writing Process Benchmark A: Generate ideas and determine a topic suitable for writing. Indicator 1: Generate writing ideas through discussions with others and from printed material. Benchmark C: Apply knowledge of graphic or other organizers to clarify ideas of writing assessments. Indicator 4: Use organizational strategies (e.g., brainstorming, lists, webs and Venn diagrams) to plan writing. 4

5 Benchmark E: Use revision strategies to improve the coherence of ideas, clarity of sentence structure and effectiveness of word choices. Indicator 7: Create paragraphs with topic sentences and supporting sentences that are marked by indentation and are linked by transitional words and phrases. Materials and Resources: The inclusion of a specific resource in any lesson formulated by the Ohio Department of Education should not be interpreted as an endorsement of that particular resource, or any of its contents, by the Ohio Department of Education. The Ohio Department of Education does not endorse any particular resource. The Web addresses listed are for a given site s main page, therefore, it may be necessary to search within that site to find the specific information required for a given lesson. Please note that information published on the Internet changes over time, therefore the links provided may no longer contain the specific information related to a given lesson. Teachers are advised to preview all sites before using them with students. For the student: Notebook paper or plain white paper, journals (optional), green crayon or colored pencil. Vocabulary: scarcity opportunity cost resources Research Connections: Daniels, H. and M. Bizar. Methods that Matter: Six Structures for Best Practice Classrooms, ME: Stenhouse Publishers, Authentic experiences helps students develop real-world knowledge and skills and gives them the ability to apply their learning in ways that prepare them for their careers and lives beyond school. Marzano, R., et. al. Classroom Instruction that Works: Research-Based Strategies for Increasing Student Achievement, Alexandria, VA: Association for Supervision and Curriculum Development, Nonlinguistic representations or imagery mode helps students think about and recall knowledge. This includes creating graphic representations (organizers). Attachments: Attachment A, Pre-Assessment Attachment B, Post-Assessment Guidelines 5

6 Attachment A Pre-Assessment 6

7 Attachment B Post-Assessment Guidelines Write a story about a time you had to make a decision between several activities that you wanted to do or several items that you wanted. Whenever you make a decision, you have to give up something that was the next best thing. That is called the opportunity cost. Pre-writing Questions: Answer the following questions about your story. 1. What did you decide? 2. What was the opportunity cost? 3. Explain why we have to make decisions. Now write your story. Be sure to include the answers to the questions in your story. 7

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