The document discusses the concept of opportunity cost. It defines opportunity cost as what is given up when choosing one option over another. It provides examples to illustrate opportunity cost, such as spending money on movies means giving up spending it on candy or saving it. The document also discusses how every choice has an opportunity cost, whether it is a personal choice or government spending choice, like the opportunity costs of the Iraq war which could have been used to provide healthcare or education.

1. O P P O R T U N I T Y C O S T

2. Opportunity cost is what you give up because you choose to do something else.

3. For example, if you want to go to the movies, the opportunity cost is that: you could have spent your money on candy OR you could have saved your money OR you could have spent your time doing some other activity

4. Everything you do has an opportunity cost.

5. View a Calvin and Hobbes cartoon http://calvinandhobbes.kabaal.net/?day=19881112 (FYI: Ambulatory means “capable of walking”.)

6. Calvin’s choice is: Give up. Let Hobbes win the football game. The opportunity cost is his other choice: keep playing and risk injury.

7. A person who has $15 can either buy a CD or a shirt. If he buys the shirt the opportunity cost is the CD and if he buys the CD the opportunity cost is the shirt. If there are more choices than two, the opportunity cost is still only one item, never all of them. M P E S

8. Discuss this question with your question with your learning partner: What is the opportunity cost of going to college after high school?

9. Every dollar spent on the Iraq War is a dollar we cannot spend on other priorities. Economists call this an ‘opportunity cost. Congress has so far spent nearly $320 billion on the war.

10. The $320 billion spent on the Iraq War could have done all of the following: Provided health care coverage for all uninsured children for as long as the Iraq War has lasted; AND Provided four-year scholarships (tuition and fees) to a public university for all of this year’s graduating seniors in the United States; AND Built half a million affordable homes; AND Tripled the energy conservation budget in the U.S. Department of Energy; AND There would still be enough to reduce the national budget by one-third.

11. Which one of these do you think is the opportunity cost for the Iraq War? Remember, only the best alternative is the opportunity cost. Discuss your answer with your learning partner.

12. Opportunity cost is what you give up because you choose to do something else.

13. With your learning partner, discuss a time when you had to make a choice. What was the choice? What was the opportunity cost? Are you happy that you made the choice you did?

14. Bibliography http://chumby.dlib.vt.edu/melissa/posters/opcost.pdf http://www.econedlink.org/lessons/index.php?lesson=EM51&page=teacher http://en.wikipedia.org/wiki/Opportunity_cost http://www.econlib.org/library/Columns/y2007/Robertsopportunitycost.html http://woolsey.house.gov/SupportingFiles/documents/Dancs_Testimony.pdf