ECONOMICS LESSON NOTE
SUBJECT:
Economics
CLASS:
SS1
TERM:
First Term
WEEK:
Week 3
TOPIC:
Opportunity Cost and Decision Making
PERIOD:
40 Minutes
LESSON OBJECTIVES
At the end of the lesson, students should be able to:
- Define opportunity cost.
- Explain the meaning of decision making.
- State the importance of opportunity cost.
- Explain the relationship between opportunity cost and choice.
- Solve simple practical problems involving opportunity cost.
ENTRY BEHAVIOUR
Students are familiar with making choices among competing wants due to limited resources.
TEACHING AND LEARNING MATERIALS
- Whiteboard
- Marker/Chalk
- Economics textbook
- Charts showing alternative choices
- Practical illustrations from daily life
REFERENCE BOOKS
- Comprehensive Economics for Senior Secondary Schools
- Essential Economics by C.E. Ande
- New System Economics
CONTENT
OPPORTUNITY COST
Opportunity cost is the next best alternative forgone when a choice is made.
Whenever an individual chooses one thing, another thing is sacrificed. The sacrificed alternative is known as opportunity cost.
According to Lionel Robbins, scarcity makes choice necessary, and every choice has a cost.
Examples of Opportunity Cost
-
A student spends ₦5,000 on clothes instead of textbooks.
The opportunity cost is the textbooks not purchased.
-
A farmer uses land to grow cassava instead of maize.
The opportunity cost is the maize not produced.
-
A government builds roads instead of hospitals.
The opportunity cost is the hospitals not built.
FEATURES OF OPPORTUNITY COST
- It involves alternatives.
- It arises because resources are scarce.
- It involves sacrifice.
- It helps in rational decision making.
IMPORTANCE OF OPPORTUNITY COST
- Helps individuals make wise decisions.
- Assists firms in resource allocation.
- Helps governments in planning.
- Prevents waste of scarce resources.
- Encourages proper prioritization.
DECISION MAKING
Decision making refers to the process of selecting the best alternative among several options.
Individuals, firms and governments make decisions daily because resources are limited.
Steps in Decision Making
- Identify the problem.
- List available alternatives.
- Consider the costs and benefits.
- Choose the best alternative.
- Evaluate the outcome.
TYPES OF DECISION MAKING
1. Individual Decision Making
This involves personal decisions made by individuals or households.
Example:
Choosing between buying shoes or a school bag.
2. Business Decision Making
This involves decisions made by firms to maximize profit.
Example:
Choosing whether to produce more goods or employ more workers.
3. Government Decision Making
This involves decisions made by the government for the welfare of citizens.
Example:
Choosing between constructing roads or schools.
RELATIONSHIP BETWEEN CHOICE AND OPPORTUNITY COST
Choice and opportunity cost are closely related.
- Scarcity creates the need for choice.
- Whenever a choice is made, another alternative is given up.
- The forgone alternative becomes the opportunity cost.
Therefore:
Scarcity → Choice → Opportunity Cost
PRACTICAL EXAMPLES
A student has ₦3,000 and wants to buy:
- A pair of sandals costing ₦3,000
- A textbook costing ₦3,000
If the student buys the sandals, the opportunity cost is the textbook.
TEACHER’S ACTIVITIES
- Explains opportunity cost using practical examples.
- Guides students through decision-making processes.
- Asks students to identify opportunity costs in daily activities.
- Writes examples on the board for discussion.
STUDENTS’ ACTIVITIES
- Participate in classroom discussion.
- Give examples of opportunity cost.
- Explain decisions they make daily.
- Answer oral questions.
EVALUATION QUESTIONS
- Define opportunity cost.
- Explain decision making.
- State four importance of opportunity cost.
- Differentiate between choice and opportunity cost.
- Give two practical examples of opportunity cost.
ASSIGNMENT
-
Define:
a. Opportunity Cost
b. Decision Making
-
Explain five importance of opportunity cost.
-
A student has ₦10,000 and decides to buy a school uniform instead of a wristwatch.
Identify the opportunity cost.
BOARD SUMMARY
- Opportunity cost is the next best alternative forgone.
- Scarcity leads to choice.
- Every choice has a cost.
- Decision making involves selecting the best option.
- Opportunity cost helps in efficient allocation of resources.
CONCLUSION
The teacher summarizes the lesson by revising the meaning and importance of opportunity cost and asking students questions based on practical life situations.
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