Unlocking Opportunity Cost: Rabbits, Berries, and the Production Possibilities Frontier

Economics Grades High School 5:48 Video
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Lesson Description

Explore opportunity cost and marginal cost using the Production Possibilities Frontier (PPF). Learn how to make informed decisions based on trade-offs.

Video Resource

Opportunity Cost

Khan Academy

Duration: 5:48
Watch on YouTube

Key Concepts

  • Opportunity Cost
  • Marginal Cost
  • Production Possibilities Frontier (PPF)
  • Trade-offs
  • Scarcity

Learning Objectives

  • Define opportunity cost and marginal cost in economic terms.
  • Explain the relationship between opportunity cost and the Production Possibilities Frontier (PPF).
  • Calculate opportunity cost in different scenarios.
  • Apply the concept of opportunity cost to real-world decision-making.

Educator Instructions

  • Introduction (5 mins)
    Begin by asking students what they gave up to be in class today. Briefly discuss the concept of scarcity and how it forces us to make choices. Introduce the video from Khan Academy on Opportunity Cost.
  • Video Viewing (7 mins)
    Play the Khan Academy video "Opportunity Cost". Instruct students to take notes on key terms and examples presented in the video.
  • Discussion and Explanation (15 mins)
    Lead a class discussion to clarify the concepts presented in the video. Focus on the definition of opportunity cost, marginal cost, and the PPF. Walk through the rabbit and berry example, emphasizing the trade-offs involved in moving along the PPF. Ask students to explain the opportunity cost from different scenarios.
  • Interactive Exercise: PPF Scenario Analysis (15 mins)
    Present students with a new PPF scenario (e.g., producing cars and computers). Provide data points representing different production combinations. Have students work in pairs or small groups to calculate the opportunity cost of producing more of one good in terms of the other. Encourage them to analyze how opportunity cost changes at different points on the PPF.
  • Real-World Application (8 mins)
    Discuss real-world examples of opportunity cost. For instance, choosing between going to college and working full-time, or a government deciding between investing in infrastructure and education. Have students share examples of opportunity costs they face in their own lives.

Interactive Exercises

  • PPF Scenario Analysis
    Students are given a PPF scenario with production data and asked to calculate the opportunity cost of producing more of one good in terms of the other.
  • Opportunity Cost Brainstorm
    Students brainstorm real-world decisions they've made and identify the opportunity cost associated with each decision.

Discussion Questions

  • What is the difference between opportunity cost and marginal cost?
  • How does the shape of the PPF reflect increasing opportunity costs?
  • Can opportunity cost be zero? Explain your reasoning.
  • How can understanding opportunity cost help you make better decisions in your personal life?

Skills Developed

  • Critical Thinking
  • Economic Reasoning
  • Problem-Solving
  • Decision-Making
  • Analytical skills

Multiple Choice Questions

Question 1:

What is opportunity cost?

Correct Answer: The value of the next best alternative forgone

Question 2:

What does the Production Possibilities Frontier (PPF) represent?

Correct Answer: The various combinations of goods that can be produced with given resources

Question 3:

What is marginal cost?

Correct Answer: The cost of producing one additional unit of a good or service

Question 4:

If a country can produce either 100 cars or 150 computers with its resources, what is the opportunity cost of producing one car?

Correct Answer: 1.5 computers

Question 5:

Moving along the PPF typically involves:

Correct Answer: Increasing production of one good and decreasing production of the other

Question 6:

Which of the following is the best example of opportunity cost for a student?

Correct Answer: The income they could have earned working instead of attending classes

Question 7:

A point outside the PPF is considered:

Correct Answer: Unattainable with current resources

Question 8:

An inward shift of the PPF indicates:

Correct Answer: A decrease in available resources or productivity

Question 9:

Opportunity cost arises because of:

Correct Answer: Scarcity

Question 10:

Which of the following decisions would NOT involve opportunity cost?

Correct Answer: Having unlimited resources and not needing to make choices

Fill in the Blank Questions

Question 1:

The technical term for what you give up when making a decision is called __________ ___________.

Correct Answer: opportunity cost

Question 2:

The __________ __________ __________ represents the limit of what can be produced with a given set of resources.

Correct Answer: production possibilities frontier

Question 3:

The opportunity cost of producing one more unit of a good is called the __________ ___________.

Correct Answer: marginal cost

Question 4:

____________ is the fundamental economic problem that creates the need for choices and opportunity costs.

Correct Answer: Scarcity

Question 5:

When you choose to spend money on a movie ticket, the __________ __________ is what else you could have bought with that money.

Correct Answer: opportunity cost

Question 6:

Points lying __________ the PPF are inefficient because resources are not being fully utilized.

Correct Answer: inside

Question 7:

__________-__________ are the trade-offs that must be made when deciding how to allocate scarce resources.

Correct Answer: Production Decisions

Question 8:

An increase in resources or technology will shift the PPF __________.

Correct Answer: outward

Question 9:

Deciding whether to study one more hour involves weighing the marginal __________ against the marginal __________.

Correct Answer: cost, benefit

Question 10:

Choosing to invest in capital goods today leads to higher future __________ because of forgoing consumption today.

Correct Answer: growth

Educational Standards

SOC.9-12.E.1.1:Define and apply basic economic concepts of money supply, scarcity, surplus, choice, opportunity cost, cost/benefit analysis, risk/reward relationship, incentive, disincentive, and trade-off to a variety of economic situations. SOC.9-12.E.1.2:Determine appropriate courses of economic actions using a variety of economic reasoning and decision-making models. SOC.9-12.E.2.2:Describe the role of the factors of production, land, labor, capital, entrepreneurship, and technology as well as the place of imports and exports in economic systems.

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