Scarcity, Choice, and Opportunity Cost
Aligned to C3.D2.Eco.1 — C3 Framework for Social Studies State Standards.
What this lesson teaches
Scarcity is the basic economic problem that people have unlimited wants but limited resources, so every choice involves a trade-off. Opportunity cost is the value of the next best alternative given up when a choice is made. Individuals, businesses, and governments all allocate scarce resources by weighing these trade-offs.
Worked example
If a government spends an extra billion dollars on highways, the opportunity cost may be the schools or hospitals that could have been funded with that same money.
Practice questions
- Define scarcity and give one example of a scarce resource.
- Explain how opportunity cost is different from the dollar price of a choice.
- Analyze the opportunity cost of a student choosing to work full time instead of attending college.
Watch the lesson
Every lesson comes with a video taught in English and Spanish — the same video the QR code in the printed workbook opens.
▶ Watch this lessonEn español
Escasez, elección y costo de oportunidad
La escasez es el problema económico básico de que las personas tienen deseos ilimitados pero recursos limitados, por lo que toda elección implica una disyuntiva. El costo de oportunidad es el valor de la mejor alternativa a la que se renuncia al tomar una decisión. Las personas, las empresas y los gobiernos asignan recursos escasos sopesando estas disyuntivas.
Ejemplo: Si un gobierno gasta mil millones de dólares adicionales en carreteras, el costo de oportunidad puede ser las escuelas u hospitales que se habrían financiado con ese mismo dinero.
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