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LESSON: TOPS & BOTTOMS
Lesson Summary
This humorous story illustrates the importance of hard work and shrewd business practices. Hare's family was hungry, with no land to raise a crop. Bear was lazy with plenty of farmable land. Hare proposes a deal to Bear: Hare will farm the land for half the crop - tops or bottoms. Bear is in for quite a surprise!
Concept: Opportunity Cost
Definition: When you make a decision, the most valuable alternative you give up is your opportunity cost.
Comprehension Questions
What goods are produced in the story?
Vegetables
When Hare proposes that Bear become a business partner, he offers to "split the profit" with Bear. What is profit?
Profit is the money you have left after all costs of business are paid.
What is opportunity cost?
Opportunity cost is the most valuable alternative you give up when you make a decision.
Although Bear did not know his opportunity cost when making his business decision, what was his opportunity cost when he chose to let Hare keep the "bottoms" - carrots, radishes, and beets?
Bear chose tops, and therefore his opportunity cost was the bottoms of the plants.
The next time, when Bear chose the "bottoms", what was his opportunity cost?
He gave up the tops - lettuce, broccoli, and celery.
Each time Hare made a business deal with Bear, he took a risk. What do we call someone who takes a risk to start a business and produce a product?
Entrepreneur
Was Hare absolutely sure he would earn a profit?
No. He had to make a shrewd business deal and work hard to produce the vegetables. He did not know for sure if he could sell his vegetables at a good price. Entrepreneurs can never be totally sure they will make a profit.
Other Concepts: Profit, Goods, Entrepreneur, Producers
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