After completing this lesson students will be able to:
- evaluate potential business decisions including costs to third parties (negative externalities) that a company might create.
- identify and compute costs, revenue, and profit.
- critique business decisions based on the benefits and costs imposed – including any negative externalities.
- develop and support ways to reduce the impacts of potential negative externalities in the fashion industry.
In this lesson from the Ethics, Economics, and Social Issues curriculum, students will be provided with a way to think about the fast fashion industry and its impact on pollution and waste, and then challenge them to advocate for ways to help reduce these negative externalities. Students participate in an activity where they are “producing” blue jeans by cutting pieces of paper. The students will make business choices about production to simulate the decision of changing from more expensive, but longer lasting, fabric to cheaper fabric. Students will make decisions based on the information they are provided that could lead to more production and more revenue. These decisions could come at the cost of hurting the environment with their waste, a negative externality.
All production decisions come at a cost–monetary cost, environmental cost, production cost, etc. Some of these costs are direct while others are indirect or they affect someone other than the person producing or consuming the good/service. These costs are called externalities. In the textile industry there are many negative externalities including pollution, cancer, and other environmental issues. Often these costs are not known at the time businesses make the decision or the incentives are such that an environmentally damaging choice might be made. As with all decisions, the marginal benefits and costs must be examined and a choice must be made that considers all costs – including negative externalities.
Teacher note: Externalities can be positive (spillover benefit) or negative (spillover cost). While the two are important to production and consumer decisions the focus on this lesson will be on negative externalities.
The market can encourage production without regard to any external costs on a third party. Ethical consideration should also be considered particularly if there are large environmental issues. However, much of the ethical discussion is who should be responsible for making decisions for the environment. Should it be the producers to alter their levels of production? Do the consumers and their purchasing habits have a role? Should the government step in to institute pollution regulations? Ethics is a vital part of considering how much to produce and in this case how many jeans should be produced.
Grades 6-8, 9-12