Investigative Question

How are resources allocated?

Economics is a social science that focuses on the choices people make about the utilization of resources and the production, distribution, and consumption of goods and services. Students can investigate the question “How are resources allocated?” to better understand the process of distributing resources. Students learn that each economic issue involves individual choices based on both monetary and nonmonetary incentives. At a store in the mall, the manager decides what goods to stock, manufacturers choose which goods to produce, and the consumer decides what to buy. But on a broader level, one that is often invisible to the consumer, decisions over what products are developed and offered for sale are typically shaped by executives of public corporations, who must simultaneously consider the needs of stockholders, corporate boards, workers, and customers. Executives also make decisions about trade-offs among human and technological investment, investment and research for future growth versus compensation of employees, managers, and shareholders. To better understand the choices that the store manager, manufacturer, and executives make in response to limited resources, students can consider the daily trade-offs they make in their own lives. For example, students may ask themselves, “How many hours will I use my human capital to study, and how many hours will I use it to work for pay?” A fundamental concept in economics is that the cost of something is what one gives up to get it. All decisions involve opportunity costs: that is, the cost of the best alternative that one gives up when making a choice. If the student chooses to study longer, he or she must give up hours that could be spent working for pay. However, the student must also consider the potential benefits of earning better grades, attending college, and receiving a higher salary in the future that may result from studying now. Students will examine the opportunity costs of choices, such as the following ones: Will I join the drama club? How much education or post-high school training will I acquire? What will I buy with my money? How much will I save? Will I use a credit card for purchases? What is the interest rate? By learning how to conduct cost–benefit analyses and how to evaluate the marginal benefits and marginal costs of alternative uses of resources, students will learn how to make informed decisions.

Economics is the study of choices. It is defined as the study of how people, businesses, and institutions make decisions based on their needs and preferences. Choices are necessary because resources and time are limited. This set explains the concept of scarcity. Students will understand that the four economic resources are land, labor, capital, and entrepreneurship and that these are all limited. Students will learn that when a resource or time is used for one purpose, it cannot be used for something else. All choices have costs and we think of these as the value of the next best alternative. The value of this next best choice is called opportunity cost. Decisions and choices are made at a certain time and place, so decisions are made by thinking at the margin, or judging each decision on its benefits and costs for a given amount of time. Incentives, both positive and negative, also play a large role in how we make decisions.

This inquiry set does not focus on resources that mirror the 2016 framework suggestion that budgeting and financial literacy be used to teach scarcity. Financial institutions have a plethora of strong resources to do that. Instead, this set is designed to give students an overview of scarcity, costs, and incentives through the use of historical sources focused on the environment and the global economy. This strategy supports the History-Social Science Historical Thinking Skill, having students show the connections, causal and otherwise, between particular historical events and larger social, economic, and political trends and developments. This set uses environmental sources to illustrate economic concepts; in doing so, it supports the integration of California’s Environmental Principles and Concepts and taps into students’ interest in environmental issues and may lead to civic engagement possibilities. The set can also contribute to making our students college-, career-, and civic-ready by providing extension learning opportunities for students to address local natural resource issues in their communities (with or without class support).

In reading this excerpt of a speech given by President Dwight Eisenhower during the Korean War, students may struggle to see that he is speaking disparagingly about the cost of war, especially given that he was also known for being a military general. This literacy activity guides students through different segments of the excerpt, starting with the most concrete comparisons between war expenses and opportunity costs and then moving to more abstract comparisons and figurative language. This process will help to make it clear for students that Eisenhower saw war as a “theft” from the American people, as the costs prevented the government from investing in infrastructure that directly benefited Americans.


  1. Provide context.

    a. Provide students with some brief context about who Eisenhower was, including his background as a military general, and the situation surrounding the Cold War and Korean War at the time of his speech.

    b. The production possibility curve, described in the teacher notes for the source, may provide useful economic context for the reading of the source and can be used either before or after this literacy activity.

    c. Use the directions at the top of the student handout to clarify the goals and structure of the literacy activity with students.

  2. Interpret and discuss text.

    a. So students can familiarize themselves with the speech before beginning the analysis process, read aloud the full excerpt (as printed on the front page of the student handout).

    b. Make sure students know which sets of questions on the handout correspond with each segment of the text. They will be asked to tackle the text out of order, beginning first by comparing the expenses, quantities, and evaluative language in segment II of the excerpt; moving then to the evaluative language in segment I of the excerpt; and, finally, tackling the figurative language in segment III of the excerpt. For each set of questions:

    i. Explain directions and model for students as needed.

    ii. Allow students to work in pairs or small groups as much as possible to maximize opportunities for student talk.

    iii. Debrief as a whole class.

    c. Finally, have students write and then talk, or talk and then write, about the final question that asks students to think about how Eisenhower’s viewpoint is expressed in the document as a whole.

  3. Extend the learning. Students can use a similar process to identify evaluative language (and the various subjects it evaluates) in future texts, including statements by political leaders, to hone their ability to see authors’ viewpoints.


12E.1 How Are Resources Allocated Student Handout

12E.1 How Are Resources Allocated Teacher Key

  • The Library of Congress. The Library of Congress’ Primary Source Analysis Tool supports an inquiry model of instruction by asking students to first observe, then reflect, then question. Their customizable tool includes specific prompts for student interrogation of books and other printed materials, maps, oral recordings, photographs and paintings, and many other types of primary sources.

  • The National Archives and Records Administration (NARA). NARA has developed a vast collection of document analysis worksheets, ready for classroom use. Their website offers teachers a wide collection of customizable tools – appropriate for working with photographs, maps, written documents, and more. NARA has also customized their tools to meet the needs of young learners, and intermediate or secondary students.

Students may have varying opinions regarding global climate change; additionally, they may not agree that the United States is responsible to other nations in regard to resource use.