1. Scarcity: Today’s Objectives
Understand the meaning of scarcity
Identify WHY things are scarce
Understand the consequences of scarcity

2. How Best to Allocate human Organs?
Organ transplant is in high demand
1st organ transplantation in US—1954
Since 1954-demand has grown for transplants
108,893 people in the US are awaiting organ transplants—mainly kidney
about 74 organ transplants are performed in the US each day
17 people die daily because of a shortage of donors (organdoner.gov)

3. “Commercialize” human organs?
Jack Kevorkian recommends ending the shortage of transplantable human organs, by commercializing organ harvesting and auctioning off body parts to pay donors and provide an expense fund for poor recipients

4. Scarce Resource-Water
Nearly a billion, 884 million people do not have access to clean and safe water
37% of those line in Sub-Saharan Africa
The United Nations estimates that Sub-Saharan Africa loses 40 billion hours per year collecting water
Same as a whole years worth of labor by the entire workforce in France

5. Why must we choose?

6. Opportunity Cost: Today’s Objective
1. Understand the meaning of opportunity costs
2. Understand the difference between explicit and implicit costs
3. Realize that all choices involve trade-offs
4. Appreciate that every choice has a cost

7. Opportunity Costs
cost of any activity measured in terms of the value of the next best alternative
Ex: if you spend your time and money going to the movie…you can’t use that same money or time sitting at home reading a book
not always a dollar amount---
What would you have done if you didn’t make the choice you did?

8. Opportunity Cost
What You give up
What you get

9. Scarcity Choice Opportunity Cost
Limited School budget
What programs do we fund?
What programs do we give up?
What expenses do we pass on to the families?
Do we start charging for students to use textbooks?
Charging for science labs? Cooking labs?
Fee to be on the football team? Basketball team?

10. Uncertainty is Everywhere
Opportunity Cost is the value of the best foregone alternative….at the time you made the decision
It is what you gave up

11. Opportunity Cost is…. Subjective Determined ONLY by the decision maker
If everyone had the same preferences there wouldn’t be alternatives
Determined ONLY by the decision maker
Go to college, work instead, or travel?
Go skiing or go to a movie?
Buy a tank of gas now or walk and save the money?
Hang with your parents or with your friends?
Order pizza or make dinner at home?
Study tonight or play video games?
Buy a stereo for your truck or new tires?

12. Because we have scarcity…
We have opportunity costs….
Which means we have to make choices
Individuals make choices
Groups have to make choices
Governments have to make choices
Countries have to make choices