SOCIAL SCIENCE 5: ECONOMICS

KEY CONCEPTS IN ECONOMICS | MODULE 5 LESSON 5.2

At the end of this module, you will be able to:

1. define opportunity cost;
2. understand the basic concepts of goods and services; and
3. justify the relevance of opportunity cost in decision making.

Suggested Time: 1 min | Actual Time Spent: ____min(s)

It has been established in the previous lesson that economics deals with the problem of scarcity
of resources and the necessity of allocating them efficiently. Scarcity also leads us to make decisions
and choose among the alternatives presented to us.

In times of decision making, what are your main considerations? How do you feel after
choosing one option over the other? Let these questions guide you as we discuss the new concepts in
economics.

Suggested Time: 2 mins | Actual Time Spent: ____min(s)

A British economist named Lionel Robbins, in 1935, argued that “a tragedy of human life is
that the consequence of choosing to do one thing is that something else has to be given up.” (Abbot
et al., 2012, p. 133). Due to scarcity of resources, we are often forced to choose among options. It is
easy to decide if one of the options is undesirable. However, in most times, we are presented with
several good options which makes us choose which of them is the best option, the one that we are
going to prioritize and which of them is only the next best option, the one that we are willing to forgo.
In economics, the value of the forgone option is referred to as opportunity cost (Bello et al., 2009).

To further understand, take this scenario as an example. Say that you are given a chance to
watch your favorite band at a live concert with meet and greet for free, but you are also offered a free
ticket in a movie screening and you’ll be meeting and be seated next to your favorite artists. Which
of these two will you choose?

Obviously, it is impossible for you to be in two places at the same time. Say you have chosen
the movie screening over the concert; this means that the opportunity cost of going to the movie
screening is equal to the fun and enjoyment you’ve given up if you chose the concert.

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 The concept of opportunity cost also became an essential guide in the allocation of goods and
services in an economy. To define, goods are the tangible commodities produced and consumed by an
individual or group of people. Cars, agricultural products, and smartphones are some of the examples
of goods. Meanwhile, services are intangible and often are actions that involve innate or acquired skills
offered and availed by an individual or groups of people. An example of this would be haircut in salons,
counseling, government services, and forms of entertainments such as musical and dance shows.

Whether as a student, an employee, or just simply a member of a community, it is essential to

evaluate the choices presented to us since every choice we make is at the expense of the other choice.
For instance, the producers should weigh the opportunity cost of producing one good over the other.
Another example would be government officials who must decide which public service or project
should be selected first, among others. It is important to remember that resources used to produce the
chosen goods or services will no longer be available to produce another set of goods or services.

Last and most importantly, the notion of opportunity cost should always be involved in our
daily decisions as individuals for us to choose the best alternative where our time, energy, and effort
will be allocated. Although, individual decisions might seem small, every small thing that adds up
can make a huge impact to the society and the economy. We should always weigh the opportunity
cost of every decision or choice not just because of the scarce nature of resources but also because its
potential contribution in the improvement and development of the country.

Suggested Time: 7 mins | Actual Time Spent: ____min(s)

Graded Alternative Assessment (20 points)

Answer the following questions. Kindly use the rubric for grading found on the table below.

1. Do you think opportunity cost is always equal to the monetary cost of a good/service you forgo
when you chose one over the other? Answer must be at least 3 sentences. (5 points)

2. Explain the statement “Choosing is refusing.” using the concepts discussed in this module.
Kindly include concrete examples. Answer must be at least 3 sentences. (5 points)

3. If you were given a chance to allocate the country’s budget, which among the departments are
you going to prioritize? For simple illustration, choose only 5 departments and rank them from
1 to 5, 1 being the highest. Explain how you came up to this ranking in 5-10 sentences. Below
is the list of some of the departments in the country. (5 points for compliance in ranking; 5
points for explanation)

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 RUBRIC
5 POINTS 3 POINTS 2 POINTS
Content The concepts discussed are applied The concepts discussed and The concepts discussed are
(50%) and reflected in the answer with applied and reflected in the limited and do not have
strong points. answer but lack strong points. strong points.

Clarity Content was discussed clearly and Content are somehow clear and Content was confusing and
(30%) coherently. The main idea can be coherent. The main idea is not coherent. The main idea
fully grasped. present but cannot be fully is not clear or not present at
grasped. all.

Examples Extensive details and examples are Only some details and examples Provided unclear examples
(20%) provided which fully supported the are provided thus the arguments or didn’t provide examples at
arguments. are not fully supported. all

Suggested Time: 15 mins | Actual Time Spent: ____min(s)

Economics is concerned in dealing with scarce resources and how to employ them
efficiently. With this, we face several alternatives and forced to choose which of them should we
prioritize. In economics, the loss of possible gain when we choose one alternative over the other is
called the opportunity cost.
Moreover, the concept of opportunity cost is essential in the allocation of goods and
services. Goods are the tangible commodities consumed and produced by an individual or groups
of people while services are the intangible ones often in form of action and use innate or acquired
skills.
The people behind the provision and consumption of these goods and services should weigh
out the options and determine which should be prioritized and sacrificed. Therefore, the analysis
of opportunity costs of different alternatives plays a huge role in personal and societal decision
making.

Formative Assessment:
Thinking exercise! For further application, answer the question below in 5-10 sentences in a piece
of paper. Use the same rubric in “Navigate” part. (5 points)

According to Krockow, a psychologist, in 2018, adults make approximately 35, 000

decisions a day. From choosing what you wear, eat, music to listen to up to your decision to
study and read this module, countless decisions were involved! With that, why do you think
opportunity cost is an important consideration in decision-making?
Suggested Time: 5 mins | Actual Time Spent: ____min(s)

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References:

Abbot, G., Farndon, J., Kennedy, F., Meadway, J., Wallace, C. & Weeks, M. (2012). The
economics book. New York: DK Publishing.

Bello, A., Bello, R., Camacho, J., Catelo, M., Cuevas, A. & Rodriguez, U. (2009).
Economics.
The economic problem: resource allocation (p.13). Quezon City, Philippines: C&E
Publishing, Inc

Department of Budget and Management. 2020 Budget at a Glance. Retrieved from

https://www.dbm.gov.ph/index.php/budget-documents/2020/2020-people-s-
budget/2020-budget-at-a-glance-signed

Krockow, E.M. (2018). How many decisions do we make each day?. Retrieved from
https://www.psychologytoday.com/us/blog/stretching-theory/201809/how-many-
decisions-do-we-make-each-day

Prepared by: Nneka B. Evangelista

Position: Special Science Teacher 1
Campus: PSHS-CALABARZON

Reviewed by: EDGAR F. ALMERO, Ed.D.

Position: SST V
Campus: PSHSWVC

PSHS Social Science 5: Economics | Page 4 of 4