Evaluation Of Choices And Opportunity Costs example essay topic

Scarcity is the basically when the demand for something surpasses the supply of something. In other words, if everybody wants gold, but its supply is limited and less than the demand, it is scarce. Sand for instance is also something people want and use in daily life, yet is supply is greater than the demand, therefore sand is abundant not scarce. In the following essay I am going to speak about the scarcity with respect to everyday life.

I will present various educated findings together with my personal opinion on the given matter. Body: Part 1 Scarcity forces us to make choices. Choices entail an alternative foregone or given up -- the opportunity cost. Economists assume that human beings make choices in a rational manner, that is, they weigh the marginal costs and marginal benefits of that alternative. Economics focuses on the analysis of this decision-making process. It helps us understand how people behave (make choices and various decisions) in the context of scarcity (Hueting, 117).

Scarcity is the most fundamental problem in economics. Scarcity exists because human wants and needs exceed the quantity of goods and services that can be produced using all available resources. Economists are fond of saying that "there is no free lunch", which means that, even if something is "free" to us, there is a cost to society in terms of the alternative foregone. For example, if a city uses land to build a football stadium, the best alternative for that land is given up. If additional funds are spent for police patrols, less money is available to hire more teachers (Hazlitt, 34).

The reality is that cannot have everything that we want. So, faced with scarcity, individuals, government and society in general must make choices. Students make choices every day. Is watching TV the best use of your scarce time? Is working at a fast-food restaurant better than the best alternative job or some other use of your time like studying French or playing chess? Therefore, when there is a need for food (scarcity) you are always welcome to either start growing your own food in the backyard or trade your activity (work) for the food and other things you find scarce (Hueting, 119).

Whenever a choice is made, something certainly must be given up. The opportunity cost of a choice is the best alternative given up. Choices involve trading off the expected value of one opportunity against the expected value of its best alternative. The evaluation of choices and opportunity costs is subjective; such evaluations differ across individuals and societies. It should be noted that the concept of efficient possibilities frontier is based on scarcity and the opportunity cost. It states that with limited resources like labor or capital (most common factors used for this model), a country can do a limited number of tasks.

In other words, it can dedicate all its labor and capital to producing automobiles but then, it would be forced to buy everything else from other countries (Seplaki, 86). If the country decides also to produce food, it will direct at least some people and capital to farming which in turn will result in the declined output for cars. As priorities grow, more and more choices start to be made and at some point of time it becomes apparent that the cars that the country started to produce in the first place may now become scarce because not much effort is directed to cars any longer, but the scarcity of other resources declined. Therefore, the only wise thing a person or a country can do in times of scarcity is a proper choice: whether to produce it on ones own, or to trade it (Hazlitt, 36). Later we will learn that sometimes the countries prefer to steal it or take it away by means of war.