1.03 Scarcity and Opportunity Cost
Natasha Anno
7/27/15

1. For each of the following, describe the opportunity cost when you decide to do each activity. a. If I decide to study for the exam, I lose out on surfing at the beach in Florida during the summer time. Surfing would be the opportunity cost. b. If I decide to go to college after high school, I lose out on making money that would most likely be put forth into paying a ludicrously high tuition and cost of textbooks, also having a steady reliable income to not have to solely rely on one’s parents. Financial independence and the freedom from college debt would be the opportunity cost of a college education. c. If I decide to leave early to school, I miss out on eating the most important meal of the day that provides the necessary brain function for the coming school day. Performing at my best is the opportunity cost to leaving early for school. d. If I decide to complete my part of the group project, I miss out on watching the minion movie everyone is talking about. The experience of laughter and one-eyed banana-eating aliens is the opportunity cost of doing my part of the group project. e. If I decide to go home early on a school night, I miss out on a teenage/adolescent/young adult party most likely accompanied by booze, underage sex, and probably illegal substances. The experience of being detained in a juvenile detention center is the cost of having personal responsibility. (In all actuality, ‘a fun night out with friends’ would have been the most appropriate answer to the question, yet, not as realistic.) 2. Based on your understanding of scarcity, please write a reflection explaining why resources are scarce using sound economic reasoning. Please use an example from your own life as part of your explanation.
We live in a capitalist society, if everyone were to have the same amount of money that would plainly be communism. To explain this, I make a certain amount of leather bracelets to sell at school for $5.00 each. I’ve devoted a certain amount of time and resources into making those bracelets which means I’ll only have a certain amount to sell. The amount which I put into the product is what I will get out of it. This is basic reasoning. Further, if I bring 8 bracelets to sell at school, yet I have 10 customers wanting a bracelet each, I will be two short. In other words, two of my buyers will find a scarcity of bracelets while I am left without a $10.00 profit.