Opportunity cost, at its most basic, is the cost of making a choice. If we only had one possible course of action in a given situation, then opportunity cost would not exist, because there would be no alternative to measure the choice against. One activity you can use to help children understand opportunity cost, is simulated decision making. In this activity, the children are given a handful of possible activities -- go to friend's house, study, go to movies -- and asked which activity they think would benefit them the most in the long run. After your students make their decision, ask them what the "cost" -- value of the opportunities they turned down -- was. A related activity involves asking students about decisions they really did make at some point and whether they could have imagined a more rational alternative.
The rationality of a decision is determined by the balance of its costs and benefits. A course of action whose benefits outweigh its costs is rational; a course of action whose trade off is further to the positive than an alternative, is more rational than the alternative. One activity based on cost-benefit analysis involves filling in the costs and benefits of one course of action in a table. The table has two rows -- choice 1, choice 2 -- and two columns -- costs, benefits. The students simply think of all the costs and all the benefits for each activity, assign each cost and benefit a dollar value, then fill out the table. Another, more advanced activity involves filling out a table with several choices, and identifying the one that has the highest positive balance.
Unfortunately, the opportunity cost of a decision is not the only constraint on whether you make that decision. The financial cost is a factor as well. Sometimes, you simply do not have the financial capital you need to make a decision that would be very rational had you the means. One activity based on the relationship between budgets and opportunity costs involves presenting your students with a set of choices with a set value of benefits and costs, and a number of hypothetical dollars. The task for the students in this activity is to find out which goods they want to spend their money on. Another activity involves providing your students with a cost-benefit analysis table and using this to weigh the opportunity costs of several activities the students are contemplating doing on the weekend.
Worksheets are used in activities in just about every subject. There are many different worksheets you can assign to children on the topic of opportunity cost. One worksheet, provided by the website "Kid's Econ Posters" (see Resources), involves having the child fill out a table like the one in section 2, except with a series of questions afterward, including "what was the opportunity cost of the decision you made?" Another worksheet presents students with a series of sets of choices. To complete the worksheet, the students have to circle which choice they would make and which choice they would least like to make.