Why is economic education important?
"Sure, the economy is thriving.  But a recent test sponsored by the National Council on Economic Education found that many adults and teens don't understand the most basic concept...  Not surprising when you learn how little Americans are taught about it." 

"On average, adults got a grade of 57% on a test on the basics of economics.  Among high school students, the average grade was 48%.  Almost two-thirds of those tested did not know that in times of inflation money does not hold its value.  Only 58% of the students understood that when the demand for a product goes up but the supply doesn't, its price is likely to increase.  Half of the adults and about two-thirds of the students did not know that the stock market brings people who want to buy stocks together with those who want to sell them. Just over one in three Americans realized that society must make choices about how to use resources." 

"The revelation that 96% of all adults believe basic economics should be part of the high school curriculum is an encouraging sign, ..."    Parade Magazine, April 18, 1999, pp. 4-5.

Student who do not study economics form very limited and often wrong understanding of how the economy works.  They generally use conspiracy theory to explain economic events in their life and in the global economy.  They do not appreciate the role of government in the economy and its limits.  These and other ideas and understanding must be taught. 

What do you know about economics?
Are you interested in finding out what you know about economics?  Take the same test used to generate the data reported in the Parade Magazine. 

Who are we?
KidsEcon.com is a cooperative effort of the National Association of Economic Educators and Agency for Instructional Technology with funding from USAGroup Foundation.  "Decisions, Decisions, Decisionsis" is one of a series of economics lessons planned for KidsEcon.com 

What is this lesson about?
This lesson is about personal decision-making.  The lesson introduces a five-step process of decision-making that can be used to make all kinds of decisions.  Choices are inevitable because resources are limited.  Every choice involves an opportunity cost. 

Review Definitions

• alternatives - Alternatives are the different options one has to satisfy a want or manage a problem.
• criteria - Criteria are goals and values used to evaluate alternatives. 
• scarcity - Scarcity is the condition of not being able to have all of the goods and services one wants. It results from the imbalance between relatively unlimited wants and the limited productive resources available for satisfying those wants. The price of a good or service reflects its scarcity. 
• choices - Choices are the alternative ways to solve or manage a problem. 
• opportunity cost - Opportunity cost is value of the best alternative given up when making a choice. There is an opportunity cost to every choice. 

• What was Malcolm's problem?
• What are Malcolm's alternatives and criteria? 
• Help Malcolm evaluate his alternatives.
• Help Malcolm discover his choice and opportunity cost.

Application of concepts
Visit Amazon.com and select three items that cost no more than $50.00 each. After selecting three items, return to this page by minimizing the Amazon.com window and find out how much you have to spend. Then using that sum of money, to select the item(s) that you can afford and identify your opportunity cost.  

After selecting three items, click here to see how much you have to spend.

Interesting Links
Dismal Scientist, the leading provider of economic analysis on the Internet.  It  offers comprehensive and timely economic analysis, tools, message boards, and other features designed to keep our readers fully informed on the state of the world economy. 

The Opportunity Cost of a Lifetime, an on-line lesson on opportunity cost.