Adm 614 Topic 1 DQ 1

The economic way of thinking requires administrators to incorporate eight principles. One of the principles relates to “tradeoffs” and another principle relates to “opportunity costs” for scarce resources. Describe how public administrators must make trade-offs by assessing opportunity costs relating to scarce resources.

Answer:

Trade-offs create opportunity costs, one of the most important concepts in economics. Whenever you make a trade-off, the thing that you do not choose is your opportunity cost. To butcher the poet Robert Frost, opportunity cost is the path not taken (and that makes all the difference). You bought that bike? Then the snowboard was your opportunity cost. Decided to work on the Fourth of July? Your opportunity cost was a relaxing day hanging out with the fam at the BBQ.Everything has opportunity costs. If you just bought something, you could have always chosen to buy something else instead. If you just chose to spend your time in a particular way, you could have always done something else. “Something else” is your opportunity cost.