Students encounter the concept of scarcity in their daily tasks but have little comprehension as to its meaning or how to deal with the concept of scarcity. Scarcity is really about knowing that often life is 'This OR That' not 'This AND That'. This lesson plan for students in grades K-2 and 3-5 introduces the concept of scarcity by illustrating how time is finite and how life involves a series of choices. Specifically, this lesson teaches students about scarcity and choice: Scarcity means we all have to make choices and all choices involve "costs." Not only do you have to make a choice every minute of the day because of scarcity, but, when making a choice, you have to give up something. This cost is called oppportunity cost. Opportunity cost is defined as the value of the next best thing you would have chosen. It is not the value of all things you could have chosen. Choice gives us 'benefits' and choice gives us 'costs'. Not only do you have to make a choice every minute of the day, because of scarcity, but also, when making a choice, you have to give up something of value (opportunity cost). To be asked to make a choice between 'this toy OR that toy' is difficult for students who want every toy. A goal in life for each of us is to look at our wants, determine our opportunities, and try and make the best choices by weighing the benefits and costs.
The introduction to this lesson is a brief online story about a little girl’s visit to a pet store with her father. She considers several pets before choosing a “cute and cuddly” dog. Students are reminded that pet owners are responsible for keeping their pets safe, healthy and happy. A discussion of a pet owners desire to provide the best for their pets leads to an exploration of people’s wants. The activities that follow challenge students to explore the wants of a pet owner and their desire to provide the best for their pet fish, and then the wants of a person. The students learn that the ability to discover their wants will help them establish priorities when they are faced with scarcity. During the evaluation process, students identify some of their personal wants. As a class, they discuss why some choices are the same and others are different. They take the discussion a step further exploring how their wants compare with those of siblings and adults in their lives. They discover that age, lifestyle, likes (tastes and preferences) and what one views as important (values) help to explain the differences.
When individuals produce goods or services, they normally trade (exchange) most of them to obtain other more desired goods or services. In doing so, individuals are immediately confronted with the problem of scarcity - as consumers they have many different goods or services to choose from, but limited income (from their own production) available to obtain the goods and services. Scarcity dictates that consumers must choose which goods and services they wish to purchase. When consumers purchase one good or service, they are giving up the chance to purchase another. The best single alternative not chosen is their opportunity cost. Since a consumer choice always involves alternatives, every consumer choice has an opportunity cost.
The following lessons come from the Council for Economic Education's library of publications. Clicking the publication title or image will take you to the Council for Economic Education Store for more detailed information.
Designed primarily for elementary and middle school students, each of the 15 lessons in this guide introduces an economics concept through activities with modeling clay.
17 out of 17 lessons from this publication relate to this EconEdLink lesson.
This publication contains 16 stories that complement the K-2 Student Storybook. Specific to grades K-2 are a variety of activities, including making coins out of salt dough or cookie dough; a song that teaches students about opportunity cost and decisions; and a game in which students learn the importance of savings.
9 out of 18 lessons from this publication relate to this EconEdLink lesson.
This interdisciplinary curriculum guide helps teachers introduce their students to economics using popular children's stories.
8 out of 29 lessons from this publication relate to this EconEdLink lesson.