In this lesson, you will learn about substitute goods. You will have choices to make in your role as a shopper. In making these choices, you will decide whether you are willing to accept one good as a substitute for another or not. Are you willing to make substitutions at the grocery store? Complete this lesson and see.


Benefit, Costs, Opportunity Cost, Scarcity, Trade-off


  • Define and grasp meaning for the term "substitute good."Brownies
  • Define and predict consequences for perfect and imperfect substitutions.
  • Think critically and make choices based on price and wants.
  • Work cooperatively in a small group.


Do you prefer Pepsi or Coke? Why? Is buying a name brand shoe important to you? Is the price a reason why you would not purchase something? Would you rather rent games or buy them? Why? Today we are going to talk about making choices about substitute goods and what that means in terms of trade-offs, costs and benefits.

Students will be able to engage in a project in which they will make decisions about substitute goods after weighing the costs and benefits of those decisions. [This lesson is a simulation. Although the activity could be carried out as a part of an extension activity, teachers are not required to actually take students to a grocery store. Teachers may want to bring in the items, or a laminated picture of the items from grocery advertisements discussed in the lesson for a more visually appealing lesson.]



  1. Have students respond to the questions listed in the Introduction. Ask students to share what types of items they are willing to make substitutions for. [i.e. brands of soft drinks, macaroni and cheese, ketchup, cereals] Ask the students why they are willing to make substitutions on some products and not others.
    • Have you ever had a substitute teacher?
    • How is the day the same?
    • How is the day different?
    • What do you like about having a substitute?
    • What do you not like?
    • Are you willing to make substitutions at the grocery store?
  2. Process their responses and then let them know that they will be learning about substitute goods. Have the class create a class definition. Then check the class definition against the economics glossary's definition of substitute goods.
  3. Next, explain that there are two types of substitute goods. (perfect and imperfect).

    "Perfect Good" Example: Hand each student a piece of paper from one company. Then a second piece of paper from another company. Is it a perfect or imperfect substitution? [perfect]

    "Imperfect Good" Example: Hand each student a crayon to write with. Ask the students how the crayon is similar to what they usually use in class and how is it different. Determine if a crayon is a perfect or imperfect substitute good. [imperfect].
  4. Explain the "project" of shopping for groceries to make the "Sand Art Brownies." Implementing the following steps:
    • Group WorkAssign students to small groups of 3-4.
    • Have students view the finished products at the kaboose website. Have each group go to the grocery store to purchase their goods. Assign jobs for each member of the group. (math mind; grocery guru; super scribe; option offerer) Have students double check their math so they do not exceed $12.00. [You may want to create an in-class shopping experience in which materials are provided with price tags attached and groups make selections and do their calculations as they go. Students can be given play money to use when shopping. This will allow the teacher to make sure that the significant price differentials stimulate some real decisions - for example, generic chips or sugar versus brand name ones, raisins instead of nuts, etc. Decorative cloth added under the jar cover versus no expenditure on decorative cloth could be another decision to be made.]
  5. As a class, discuss the variety of choices that each group made. Ask them why they made their choices?
  6. Have the students go to the ECONGROCERY Store. This document will aid you in your purchase choices. [After filling out the ECONGROCERY Store worksheet bring the groups together comparing the decisions the students made and why - use the concept of opportunity cost in the decision making process. As each group shares the choices they made and the trade-offs, have them also share what the final cost per jar would be. Record this on the board. Then discuss the trade-offs made and how the overall goal for the project and limited amount of funds to spend influenced the decision made.]


  1. Have students write a letter to the person to whom they are giving the Sand Art Brownies. In the letter, explain how the grocery shopping went and why they selected the products they did. The letter should explain the perfect as well as the imperfect goods.
  2. Have students collect grocery store ads from various stores local and regional both work. Have students cut out, copy, or print the products and create a bulletin board of substitute goods that are both perfect and imperfect.
  3. Write a letter to a pen pal describing the process you went through to compete this class project. Make sure to use the words substitute goods- both imperfect and perfect.
  4. Look around the school and create a list of all the examples of substitute goods that are a part of your every day. How many can you find?


Consumers in the United States have many substitute goods and therefore, choices available to them. As a consumer, you need to be aware of the choices that you make while shopping and participation in this economy. We make choices every day and therefore we experience trade-offs, costs and benefits from the choices we make. Today's lesson was one experience, using the grocery store as a common place that substitute goods are readily available. The next time you visit the store, keep this in mind. [Take some time and quickly go over the material learned with the students. This activity has students explore what a substitute good is and how it works. The student's new understanding should be valuable to them in their real life situations and application.].


This activity gives students a good subject on which to interview and converse with adults. It can also provide opportunities for your students to develop relationships within the community.

Think back to what you said in the beginning of this lesson about wanting brand name clothing, Pepsi or Coke, own or rent games. Do you have a better understanding now of what decisions you make on a daily basis and how those decisions are an exercise in an economic activity? Create three questions to ask your family and friends about choices they make that are trade-offs. You create the questions such as the ones we discussed today. Create a chart showing what you found about people's willingness to make trade-offs and why they make those decisions.


  • “I think the term "economic freedom" is pretty loaded because the concept of "freedom" is generally regarded positively, so people would tend to support the concept even if they have no idea what it means. I think the term "unregulated markets" is neutral sounding and should be used instead of "economic freedom."”

    Adam T., Richmond, Canada   POSTED ON February 2, 2008

  • “Great article. A few more resources would have been nice. For example, I use this page for my Kroger Coupons and weekly ad which has the circular and the coupons for Krogers. It's a good article that should make students think before buying and that's a skill that will last them the rest of their lives and same untold amount of money.”

    Al D., Howell, MI   POSTED ON August 5, 2011

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