Thinking Like an Economist: Part 1
Unit 1 · Lesson 1.3 · Last updated May 20, 2026
A 45-minute lesson introducing the role of economists and the cost-benefit and opportunity cost principles of economic thinking — no prior econ background required.
Overview
In this lesson, students are introduced to the role of economists and the four principles of economic thinking that serve as a decision-making framework (the cost-benefit, opportunity cost, marginal, and interdependence principles). Students will learn about the cost-benefit and the opportunity cost principles and have a chance to practice applying these in different formats. Note: Explicit connections are made to the primary activity in Lesson 1.2. Consider changing the examples if students have not participated in that lesson.
Video Tutorial
Learning Objectives
- Define economics and explain what economists do.
- Describe the cost-benefit and the opportunity cost principles and explain the role they play in decision making.
Materials
- Instruction Slides (display during class period)
- Student Handout pp. 5–6 (1 copy per student)
- Practice and Demonstration pp. 8–10 (1 copy per student)
- KEY Practice pp. 11–13 (6 copies)
- Unit 1 Overview: Economic Foundations p. 14 (1 copy per student) — consider printing on colored paper to help students locate it throughout Unit 1
- Optional: Unit 1 Key Terms (digital access or 1 copy per student)
Lesson Sequence
Slides 1–4
- Display Slide 2. Distribute 1 copy of Student Handout to each student and instruct students to follow the instructions on the slide. Additional educator tips and suggested answers are in the notes section throughout Instruction Slides.
- Note (Key Terms): Unit 1 Key Terms can be used as scaffolding during the lesson or for metacognition after Lesson 1.4. As scaffolding, distribute before the lesson so students can take notes directly on the terms list. As metacognition, distribute after Lesson 1.4 and encourage students to review definitions and add any missing details to Student Handout.
- After 2 minutes, click to reveal the remaining text on the slide and ask students to share which items they marked with a peer.
- Display Slide 3. Explain that each item from the Activator represents an area of study that an economist might specialize in.
- Proceed to Slide 4 and introduce the learning objectives for the lesson.
Slides 5–26
- Advance through Slides 5–6 and tell students to add notes, examples, and drawings to Student Handout throughout the lesson.
- Display Slide 7. Explain what economists do and the tools they use.
- Proceed to Slide 8 and ask students to generate their own definition of economics based on what economists do. Click to reveal the definition on the slide.
- Display Slide 9 and explain the role scarcity plays in decision making.
- Advance to Slide 10. Introduce the four principles of economic thinking. Draw student attention to the graphic on Student Handout.
- Proceed to Slide 11. Click to define and describe the two major branches of economics.
- Display Slide 12. Present the analogy illustrating the difference between microeconomics and macroeconomics.
- Proceed to Slide 13. Allow 2 minutes for students to discuss as many questions as time permits, then debrief all 3 questions as a class.
- Advance to Slide 14. Tell students they will now learn about the cost-benefit and opportunity cost principles.
- Use Slides 15–16 to explain the cost-benefit principle. On Slide 15, click to define utility and explain how it varies based on individual preferences. Note: The anchor question "Benefits beat costs?" on Slide 15 is a helpful tool for students.
- Proceed to Slide 17. Define incentives and explain that they are another way to think about costs and benefits. Pro Tip: Reinforce that incentives can be positive or negative.
- Display Slide 18. Have students read the review question and discuss with a peer. Click to reveal the response.
- Advance to Slide 19. Ask students to apply the cost-benefit principle to the question. Click to reveal and poll the class on behavior changes.
- Display Slide 20. Describe the role preferences play in maximizing benefits.
- Proceed to Slide 21. Explain that changing incentives can, but does not always, lead to a change in behavior.
- Progress through Slides 22–23 to introduce opportunity cost. Alert students to the common stumbling block: opportunity cost is only the next most highly valued alternative, not all foregone alternatives.
- Advance to Slide 24 and explain the opportunity cost principle. Note: The anchor question "Or what?" on Slide 24 is a helpful tool for students.
- Display Slide 25. Click to reveal questions and instruct students to answer with a peer.
- Proceed to Slide 26. Students discuss with a peer then debrief as a class.
Slides 27–28
- Advance through Slides 27–28. Place students in pairs or allow them to select their own partners.
- Distribute 1 copy of Practice and Demonstration to each student. Clarify the instructions on Slide 28. Pro Tip: Students receive all practice options and demonstration prompts as ready-made retrieval practice for later in the unit. If assigned as out-of-class practice, students will need access to KEY Practice afterward — posting it to a learning management system is a low-cost way to provide immediate feedback.
- Place copies of KEY Practice around the room. Remind students they must review KEY Practice and correct mistakes before moving to the demonstration prompt. Note: KEY Practice is not exhaustive. Students may make slightly different connections — they should check with you to ensure additional responses reflect sound economic reasoning.
- Allow pairs 13 minutes to complete Practice and Demonstration. Circulate to answer questions and clarify as needed.
- Collect Practice and Demonstration and review student demonstration responses for common misconceptions to address at the start of the next class.
Slides 29–30
- Progress through Slides 29–30. Distribute 1 copy of Unit 1 Overview to each student. Explain that it serves as a roadmap for Unit 1, containing all learning objectives, the summative assessment description, and the Big Ideas and Essential Questions for Unit 1 and the semester.
- Direct students to read the Semester and Unit 1 Big Ideas and Essential Questions on Unit 1 Overview, then answer the question on the slide with a peer.
- Instruct students to keep Student Handout accessible — they will need it again in Lesson 1.4. Encourage students to do the same with Unit 1 Overview as it will be referenced throughout Unit 1.
Aligned Standards
Voluntary National Content Standards in Economics
Standard 1 Scarcity and Allocation
Standard 2 Decision-Making
What Educators Are Saying
I liked how the scenarios relate to their daily lives.
High School Economics Teacher, Arizona
I really like the way they are structured. Also, they are really easy to follow because they are so detailed.
High School Economics Teacher, Maryland
I absolutely loved the activator for this lesson & the emphasis on economics being a social science ... Overall, the lesson was very easy to implement.
High School Economics Teacher, Indiana