Financial Literacy Camp

Money and Choices “Thinking Economically”

In This Lesson: 1.Explain how limited resources necessitate choices 2.Identify the cost and benefit of a choice 3.Define opportunity cost 4.Identify and evaluate incentives

Activity: On your big poster paper, write all the things that you want that can be bought with money.

Limited Resources You can’t go to a movie AND a concert on Friday night because TIME is limited. You can’t buy everything you see at the mall because MONEY is limited. You can’t put a basketball and all of your books in your backpack because SPACE is limited.

Every Choice has an Opportunity Cost Because time, space and money are limited, people can’t have everything they want; they have to make choices. Every choice involves an opportunity cost: the next best alternative.

Steps to Making a Choice 1.Resources are limited. 2.People cannot have everything they want 3.People must make choices. 4.Every choice involves an opportunity cost. 5.People’s choices have consequences. 6.People choose what benefits them the most. 7.People respond to incentives.

Incentives Matter Buy a new bike Make money. Use it to get your job. (ex. Paper route) You can get exercise riding the bike Put money in savings account Go to college Donate to a charity Clean your room Stay under text message limit Choices Monetary Incentive s Non-Monetary Incentives Opportunit y Cost (optional)

Choosing the Better Incentive Bookbag: Buy one for $11.99 The better incentive is coupon # The reason is: $2.40 $2.00 Which is the better incentive?Coupon #1

Choosing the Better Incentive $5.18 $4.77 Which is the better incentive?Coupon #2 Snappy-Krunch Cereal: Buy 3 boxes at $2.59 per box The better incentive is coupon # The reason is:

Choosing the Better Incentive $2.56 $4.98 Which is the better incentive?Coupon #1 Super-Nutty Peanut Butter: Buy two jars, either size, 32 oz. jar for $2.56 or 48 oz. jar for $2.99 The better incentive is coupon # The reason is: Hint...figure price per ounce.

Choosing the Better Incentive $ $ Which is the better incentive?Coupon #2 Soccer Shoes: Buy 2 pairs at $69.95 a pair The better incentive is coupon # The reason is:

Choosing the Better Incentive $ $ Which is the better incentive?Coupon #2 Amusement Park: Buy 6 all day admission tickets at $45.00 per ticket The better incentive is coupon # The reason is:

Which Would You Choose? #1  Go to a movie on Friday night OR  Stay home and babysit #2  Buy a name brand pair of shoes for $150 OR  Buy an off-brand pair of shoes for $50

Which Would You Choose? #3  Choose an item of higher quality OR  Choose an item with a lower price #4  Buy an instrument from the local music store OR  Shop online and save $50

In This Lesson: 1.Explain how limited resources necessitate choices 2.Identify the cost and benefit of a choice 3.Define opportunity cost 4.Identify and evaluate incentives