Unlocking Opportunity Cost: Rabbits, Berries, and Bowed-Out Curves

Economics Grades High School 6:26 Video
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Lesson Description

Explore the concept of increasing opportunity cost using a hunter-gatherer scenario, linking it to production possibilities frontiers and real-world economic decisions.

Video Resource

Increasing opportunity cost | Microeconomics | Khan Academy

Khan Academy

Duration: 6:26
Watch on YouTube

Key Concepts

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

Learning Objectives

  • Define opportunity cost and explain how it is calculated.
  • Explain the concept of increasing opportunity cost and provide real-world examples.
  • Illustrate increasing opportunity cost using a production possibilities frontier.
  • Analyze how resource allocation affects opportunity cost.

Educator Instructions

  • Introduction (5 mins)
    Begin by asking students what they had for breakfast and what they could have had instead. Introduce the idea of opportunity cost as the value of the next best alternative. Briefly mention the video they are about to watch.
  • Video Viewing (10 mins)
    Play the Khan Academy video "Increasing Opportunity Cost." Instruct students to take notes on the key examples and explanations.
  • Discussion (15 mins)
    Facilitate a class discussion about the video. Focus on the hunter-gatherer example and the explanation of why opportunity cost increases. Use the discussion questions below to guide the conversation.
  • Interactive Exercise (15 mins)
    Have students complete the interactive exercise described below, working individually or in small groups.
  • Wrap-up (5 mins)
    Summarize the key concepts of the lesson and preview the quiz for the next class.

Interactive Exercises

  • PPF Creation and Analysis
    Provide students with a scenario involving two goods (e.g., studying vs. socializing, producing cars vs. producing trucks). Give them data points representing different production possibilities. Have them plot these points on a graph to create a PPF. Then, ask them to calculate the opportunity cost of moving between different points on the PPF and explain whether the PPF demonstrates increasing, decreasing, or constant opportunity costs.

Discussion Questions

  • What is the opportunity cost of choosing to hunt one more rabbit in Scenario F?
  • Why does the opportunity cost of hunting rabbits increase as the hunter-gatherer spends more time hunting?
  • Can you think of other real-world examples of increasing opportunity cost?
  • How does the shape of the Production Possibilities Frontier (PPF) reflect increasing opportunity cost?

Skills Developed

  • Critical Thinking
  • Economic Reasoning
  • Data Analysis
  • Graphing

Multiple Choice Questions

Question 1:

Opportunity cost is best defined as:

Correct Answer: The value of the next best alternative forgone.

Question 2:

Increasing opportunity cost implies that:

Correct Answer: The more you produce of one good, the more you have to give up of the other.

Question 3:

A Production Possibilities Frontier (PPF) that is bowed outwards (concave to the origin) indicates:

Correct Answer: Increasing opportunity costs.

Question 4:

In the hunter-gatherer example, the increasing opportunity cost of hunting rabbits is due to:

Correct Answer: The hunter-gatherer having to spend more time and effort to catch each additional rabbit, forgoing easier-to-gather berries.

Question 5:

Which of the following is an example of a trade-off demonstrating increasing opportunity cost?

Correct Answer: All of the above are examples.

Question 6:

Scarcity is a key factor in determining opportunity cost because:

Correct Answer: It forces individuals and societies to make choices.

Question 7:

If a society decides to produce more military goods, the opportunity cost is:

Correct Answer: The civilian goods that could have been produced instead.

Question 8:

Which of the following best describes efficient resource allocation?

Correct Answer: Producing goods and services that maximize consumer satisfaction and societal well-being.

Question 9:

The slope of the Production Possibilities Frontier (PPF) represents:

Correct Answer: The opportunity cost of producing one more unit of a good.

Question 10:

If a country is operating inside its PPF, it means:

Correct Answer: The country is underutilizing its resources.

Fill in the Blank Questions

Question 1:

The value of the next best alternative forgone is called the ______.

Correct Answer: opportunity cost

Question 2:

When the opportunity cost of producing each additional unit of a good increases, this is known as ______ opportunity cost.

Correct Answer: increasing

Question 3:

A graphical representation of the combinations of goods and services an economy can produce is called the ______ ______ ______.

Correct Answer: Production Possibilities Frontier

Question 4:

The fundamental economic problem of having unlimited wants but limited resources is known as ______.

Correct Answer: scarcity

Question 5:

Every choice involves a ______ of resources between competing uses.

Correct Answer: trade-off

Question 6:

When a PPF bows outwards, it illustrates the concept of ______ opportunity costs.

Correct Answer: increasing

Question 7:

If resources are used efficiently, the economy will produce at a point ______ the PPF.

Correct Answer: on

Question 8:

If a country chooses to produce more capital goods rather than consumer goods, it’s current opportunity cost is the forgone ______.

Correct Answer: consumer goods

Question 9:

Producing goods inside the PPF indicates that resources are being ______.

Correct Answer: underutilized

Question 10:

The ______ shows the maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently employed.

Correct Answer: PPF

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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