Economic Choice and Opportunity Cost
Costs and Benefits
All decisions involve costs and benefits.
Cost: what you give up or lose when you make a decision
Benefit: something good that comes out of your decision
To make better choices, you should consider the costs and benefits of your decisions by using a decision-making model.
Decision-making model: helps you to see the costs and benefits of a choice and make careful choices
Example
Use a decision-making model to weigh the costs and benefits of the following situation: everyone shares supplies instead of keeping their own.
The table below lists some of the possible benefits and costs of sharing supplies. See if you can think of any more!
Opportunity Cost
Opportunity cost: the next best choice that is given up when an economic choice is made
To make an economic decision, it's important that you compare the opportunity costs of various choices with the benefits of those choices.
