Cogito
Consumer Math · Chapter 2 · Lesson 2
Needs, Wants, and Trade-offs
Every dollar spent is a dollar not spent elsewhere.
12 problems · about 20 minutes · TEKS M.M.2.B
What this lesson teaches
The student distinguishes needs from wants and evaluates spending trade-offs including opportunity cost.
- A need is what you cannot function without; everything else is a want.
- Opportunity cost is the best alternative you gave up.
- Annualise recurring costs before judging them.
Warm Up
Straightforward practice. Get the method working first.
5 problems$6 a day for 250 days. Annual cost in dollars?
Answer 1500
Why $1500.
What is opportunity cost?
Answer The best alternative you gave up by spending the money.
Why What the money could otherwise have done.
$4 a day for 250 days. Annual cost in dollars?
Answer 1000
Why 4 × 250.
$25 a month. Annual cost in dollars?
Answer 300
Why 25 × 12.
$8 lunch for 250 days. Annual cost in dollars?
Answer 2000
Why 8 × 250.
Build It Up
The same ideas with more to keep track of.
3 problemsThree subscriptions at $12, $15 and $9 a month. Annual total in dollars?
Answer 432
Why 36 × 12.
Cutting a $5 daily habit to twice a week, 50 times a year. New annual cost in dollars?
Answer 250
Why 5 × 50.
$2 a day for 365 days. Annual cost in dollars?
Answer 730
Why 2 × 365.
Stretch Yourself
Mixed problems. Work out what kind of question it is before you start.
4 problemsSort each item as a need or a want in most situations.
Answer Need: Basic groceries, Rent · Want: The newest phone model, A streaming subscription
Why Ask what you could not function without.
$30 a month gym. Annual cost in dollars?
Answer 360
Why 30 × 12.
The Habit: $5 a day for 250 days. Annual cost in dollars?
Answer 1250 dollars
Why $1250.
The Subscription: $15 a month. Annual cost in dollars?
Answer 180 dollars
Why $180.