Choices and Costs
Every day, we make choices about money. Sometimes we have enough money to buy everything we want, but usually, we don’t. That means we must decide what to buy and what to give up.
When we make a decision, we also give something up. The thing we give up is called the opportunity cost. For example, imagine you have $5. You can buy a movie ticket 🎬 or a snack 🍫. If you choose the movie, your opportunity cost is the snack. If you choose the snack, your opportunity cost is the movie.
Every choice has a trade-off. A trade-off is when you give up one thing to get another. Sometimes, trade-offs are easy, and sometimes they’re hard.
Learning about opportunity cost helps us become smarter with money. It reminds us to think: What am I giving up when I make this decision?
Key Terms
- Decision-Making – choosing between options.
- Opportunity Cost – the thing you give up when you choose something else.
- Trade-Off – giving up one option to gain another.
“Would you rather have $5 now OR $20 in a week?”
Choices and Costs (Read)
Every day, we make choices about how to use our money. Sometimes we can buy everything we want, but most of the time, we have to decide which things are the most important.
Think about this: You have $5 in your pocket. You can buy a slice of pizza 🍕 at lunch or a chocolate bar 🍫 after school. Both sound good—but you can’t buy both with only $5. If you pick the pizza, you give up the chocolate bar. If you buy the chocolate bar, you give up the pizza.
The thing you give up when you make a choice is called the opportunity cost. Every decision has an opportunity cost. It’s what you could have had, but didn’t choose.
We also call this a trade-off—giving up one thing in order to get another. Some trade-offs are easy (like choosing between two snacks), and some are harder (like choosing between buying new shoes now or saving for a trip later).
Making smart money decisions means thinking about the opportunity cost before you spend. Ask yourself: “If I buy this, what am I giving up?”
By thinking this way, you’ll learn to make better choices—not just for today, but for your future goals too.
Key Terms
- Decision-Making – choosing between options.
- Opportunity Cost – the thing you give up when you choose something else.
- Trade-Off – giving up one option to gain another.
Question: What is Opportunity Cost?
Answer: Opportunity Cost is the value lost from the second best choice that could have been chosen, but was not chosen.
Activity (15–20 min): Would You Rather?
- Present different money scenarios:
- “Buy snacks every day this week OR save for a field trip?”
- “Spend allowance on candy OR save for a new video game?”
- “Buy new shoes now OR save for a concert ticket later?”
- Students vote with hands or move to sides of the room.
- Discuss: What’s the opportunity cost of each choice?
Journal Writing: Write down one decision they made this week and what the opportunity cost was.
Multiple-Choice Worksheet
Dollars and Decisions – Day 3: Decision-Making & Opportunity Cost
Part A – Vocabulary
- The thing you give up when you make a choice is called:
a) Trade
b) Savings
c) Opportunity Cost ✅
d) Money - Choosing between different options is called:
a) Shopping
b) Decision-Making ✅
c) Borrowing
d) Spending - A trade-off happens when:
a) You do chores for money
b) You give up one option to get another ✅
c) You save all your money
d) You have everything you want
Part B – Understanding
- If you spend $10 on a video game instead of saving for a field trip, what is your opportunity cost?
a) The $10 bill
b) The video game
c) The field trip ✅
d) The allowance - You have enough money to buy either pizza or a milkshake. If you choose pizza, what’s your opportunity cost?
a) The pizza
b) The milkshake ✅
c) The money
d) The store
Part C – Short Answer
- Write about one time you had to make a money decision. What was your opportunity cost?
Answer Key
- c) Opportunity Cost
- b) Decision-Making
- b) Give up one option to get another
- c) The field trip
- b) The milkshake
- (Varies)
Unleashed Learning Gateway 