From Middle School Economics, Unit I, Lesson 2
© Council for Economic Education, New York, NY

Often decisions result in trading off some of one thing to get some of another. This lesson introduces the idea of trade-offs and provides practice in analyzing options before making decisions.

Choice Opportunity cost Alternatives Trade-offs


  • Mathematics
  • Charts and graphs
  • Use of calculators


  • Define opportunity cost.
  • Identify alternatives.
  • Explain that a trade-off involves giving up some of one thing to get some of another.
  • Analyze trade-offs.


After reading about a problem, students identify alternative solutions, trade-offs made in choosing each alternative, and the opportunity cost of selecting each option. Students describe trade-offs and create a graphic to rep-resent alternatives and trade-offs.


  • Two class periods


National Standard Number: 1
Productive resources are limited. Therefore, people can not have all the goods and services they want; as a result, they must choose some things and give up others.

National Standard Number: 2
Effective decision making requires comparing the additional costs of alternatives with the additional benefits. Most choices involve doing a little more or a little less of something: few choices are "all or nothing" decisions.

National Standard Number: 4
People respond predictably to positive and negative incentives.



1.Explain that sometimes decisions result in giving up some of one thing to get some of another thing. This is called a trade-off.

2. Display transparency of Visual 1 and ask students to identify the problem in this situation. (The main gym is available only for 8 hours but the students will play 20 basketball games.) Explain there are two obvious choices. The students could use all 8 hours for girls' games or all 8 hours for boys' games.

3. Ask students to identify other options. List these on the board.
(4 hours for girls, 4 hours for boys; 6 hours for girls; 2 hours for boys, 6 hours for boys, 2 hours for girls; 3 hours for boys, 5 hours for girls; 3 hours for girls, 5 hours for boys; and so on.) Select a student and discuss:

  • If you were making this decision, what option would you choose? (Answers will vary but use one student's answer as an example.)
  • What would your second choice be? What do we call this second choice? (opportunity cost)
  • Does choosing this option result in any trade-offs? (Yes, you give up being able to play some boys' (girls') games in order to play some girls' (boys') games.)
4. Display transparency of Visual 2. Discuss sample charts and keys. Using the blank box on the transparency, demonstrate another option.

5. Divide the class into groups of 2­3 students. Distribute calculators and markers to each group. Ask students to illustrate as many options as they can and determine the percent of time in the large gym allotted to each group. They may use squares, circles, or rectangles

6. Distribute a copy of Activity 1 to each student. Assign each group one of the situations on the sheet. Instruct the group to determine a list of possible options, and assign time or money values.

7. Ask students to use the back side of Activity 1 to draw pie charts or graphs representing each option they have described. Instruct them to identify the choice they would make, their opportunity cost, and the trade-offs resulting from their decision.

1. Ask groups to tell which situation they were assigned, identify options they listed, their decision and opportunity cost, and the trade-offs that resulted.

1. Instruct groups to write their own decision situations that have a variety of possible outcomes. When paragraphs are complete, have them trade with another group, calculate percentages, and develop a graph. Explain that depending on the options, they may wish to use something other than a pie chart.

2. Ask students to answer the following questions in their Economics Role Journal regarding the role of lifelong decision maker.

  • Is this one of your roles now? If so, how? 
  • How will you fill this role in the future? 
  • How will being a good decision maker benefit you? 
1. Ask students to look for pie charts in news magazines and newspapers. Instruct them to translate one of their decision graphs into another visual format (such as a bar graph).

2. Instruct students to collect pictures or headlines from newspapers that describe local economic decisions. Students identify the trade-offs in these decisions and develop a presentation that identifies the pros and cons of each alternative and the decision/trade-off involved. They may use visuals in their presentations.

K-5 Lessons
6-12 Lessons