YOUR NAME
Econ 1110 Application Paper
Economic Principle: SCARCITY & OPPORTUNITY COST:
How they shape our choices and reflect our normative
perspectives.
Simply copy the paper heading, inserting your own name, of course!
FIRST
SECTION
In your own words (do not quote or paraphrase the text or any
other source), explain as completely as you can what an economist
means by SCARCITY (define this term). Describe the 5 economic
resource categories and how they relate to the scarcity
problem. Explain opportunity cost. How does it reflect scarcity?
What does it have to do with decision making? Finally, explain the
difference between positive and normative economics and how our
normative positions affect the choices we make — individually and
as a society.
SECOND
SECTION
Choice 1:
Title the next section of your paper MY SITUATION:
Identify two competing outputs (not activities) in your
life. SELECT A SITUATION THAT ALLOWS FOR SOME
COMPROMISE. No all-or-nothing dilemmas. Clearly, you have lots
of things competing for your resources, but pick just TWO that are
very important and compete with one another for the resources you
have available. Only two because you will be translating your
situation to a 2-dimensional PPC graph.
FOCUS on OUTCOMES not on activity. The limited resources are
your constraints and are held constant, so explain how much of your
labor and human capital you have to divide between these two
goals. You can measure the application of your resources using
time (think in terms of man hours or machine hours), but TIME is
NOT itself an economic resource. Time is simply an allocation
measure.
Here is an example: If I have two hours of my labor and human
capital (labor and human capital are the limited resources, NOT
time), what can I produce? Option #1 is to grade Econ1110 papers,
so the number of papers graded is the “good” produced. Zero will
go at my graph’s origin and the maximum 2-hour output (say, 10
graded papers) at the x-intercept. Option #2 is to hit golf balls. I can
hit 120 golf balls in 2 hours.
Then I explain how accomplishing more on one front means scaling
back on the other. The more papers I get graded, the fewer golf
balls hit and, as a result, How do my normative beliefs shape my
decisions? This output choice need not be all-or-nothing.
I could split my resources 50/50, grading 5 papers and hitting 60 golf
balls. That puts me about in the middle, with 5 papers graded 60
golf balls hit. But it is finals week and grades are due, so this day I
give my all to your work, grading the maximum: 10. I love golf, but
teaching is what i do best, and it’s what I get paid for! It would be
nice to get paid for playing golf, but I am not at that level. So, how
could I make this decision? This is satisfactory in the short-run and
okay with my very understanding husband. But in the long-run,
allocating my resources 100% to grading and 0% to golf is totally
unacceptable and would lead to a stir crazed teacher. In the long-
run, one must find a happy median between work and play.
You describe two competing goals/accomplishments in your life and
