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UnitSevenScarcity,Choice,andOpportunityCostMoreAbouttheAuthorRobertE.Hall(1943-)isanappliedeconomistwithinterestsintechnology,competition,employmentissues,andeconomicpolicyintheaggregateeconomyandinparticularmarkets.HallisamemberoftheNationalAcademyofSciences,afellowofboththeAmericanAcademyofArtsandSciences,andtheEconometricSociety.BeforecomingtoStanfordDepartmentofEconomicsin1978,HalltaughtattheMassachusettsInstituteofTechnologyandattheUniversityofCalifornia,Berkeley.Hallhasadvisedanumberofgovernmentagenciesonnationaleconomicpolicy,includingtheJusticeDepartment,theTreasuryDepartment,andtheFederalReserveBoard.HeservedontheNationalPresidentialAdvisoryCommitteeonProductivity.Hehastestifiedonnumerousoccasionsbeforecongressionalcommitteesconcerningnationaleconomicpolicy.Formoreinformation,pleasevisit~rehall/MarcLiebermaniscurrentlyClinicalAssociateProfessorofEconomicsatNewYorkUniversity.HehaspresentedhisextremelypopularPrinciplesofEconomicscourseatVassarCollege,HarvardUniversity,theUniversityofCalifornia/SantaCruz,andtheUniversityofHawaii.Liebermanisco-editorandcontributortoTheRoadtoCapitalism:EconomicTransformationinEasternEuropeandtheFormerSovietUnion.Inaddition,hehasconsultedwiththeBankofAmericaandtheEducationalTestingService.Inhislimitedsparetime,heisanaccomplishedscreenwriter.Heco-wrotethescriptforLoveKills,arecentmoviethatairedontheUSACableNetworkandisnowavailableinvideostoresaroundtheworld.Formoreinformation,pleasevisit—timeandmoney,arefiniteandhowlifeinvolvesaseriesofchoices.Specifically,thisunitteachesstudentsaboutscarcityandchoice:Scarcitymeansweallhavetomakechoicesandallchoicesinvolvecosts.Notonlydoyouhavetomakeachoiceeveryminuteofthedaybecauseofscarcity,but,whenmakingachoice,youhavetogiveupsomething.Thiscostiscalledopportunitycost.Opportunitycostisdefinedasthevalueofthenextbestthingyouwouldhavechosen.Itisnotthevalueofallthingsyoucouldhavechosen.Choicegivesus'benefits'andchoicegivesus'costs'.Notonlydoyouhavetomakeachoiceeveryminuteoftheday,becauseofscarcity,butalso,whenmakingachoice,youhavetogiveupsomethingofvalue(opportunitycost).Tobeaskedtomakeachoicebetween'thisorthat'isdifficultforstudentswhowanteverything.Agoalinlifeforeachofusistolookatourwants,determineouropportunities,andtryandmakethebestchoicesbyweighingthebenefitsandthecosts.Thisunitexplorestheconceptofopportunitycost,andillustrateshowopportunitycostdiffersamongdifferentindividuals.Finally,itpointsoutthatopportunitycostshouldbetakenintoconsiderationineverydecisionofindividualsandsociety.Someparagraphsoftheoriginalessayareabridgedtomeettheteachingrequirement.StructureoftheTextPara.1~Para.5:Introduction.Theconceptofscarcityandtherelationbetweenscarcityandtheindividual.Para.6~Para.8:Therelationbetweenscarcityandsociety.Para.9~Para.12:Theconceptofopportunitycost.Para.13~Para.18:Opportunitycostforindividuals.Para.19~Para.20:Opportunitycostforsociety.Para.21~Para.22:Theprincipleofopportunitycost.TeachingSuggestionsINTRODUCINGTHETOPICLead-inQuestionsThisactivityisdesignedtoarousestudents’interestinthetopicofthetext.Youcanaskstudentstopreviewthisunitbythinkingoverthesequestionsafteryourlastclassandthenchecktheiranswersbyaskingthequestionswiththeclassasawhole.Orstudentscanbedividedintogroupstointervieweachother.Theycanchoosesomequestionsfromthelistorthinkoftheirownquestionsaboutthesametopictoask.Ifthereisenoughtime,collecttheirideasbychoosingoneortwogroupstoreporttheresultoftheirinterviewtotheclass.WordExtensionThisactivityisdesignedtogivestudentspracticeinexplainingthingsintheirownwords.Helpthemtogiveaccuratedefinitionstotheterms.Askvolunteerstogiveotherrelativewordstheyknow.Writeallresponsesontheboard.Tosavetime,youcanalsoaskthemtopreparebeforeclass.Trytomaintainafastpaceinthispartandcreateanactiveatmosphere.MEETINGTHEAUTHORGiveabriefintroductiontotheauthorusingyourownwords.Donotjustreadfromthebook.Emphasizethepartsthatrelatetothetopicofthetext.COMMUNICATIVEACTIVITIESInordertosavetime,studentscanbegroupedtododifferentactivities.Previouspreparationisnecessary.ActivityOneTheanswerisD,2sweaters.Remindthestudentsthatopportunitycostdoesnotconcernthetypicaltimeatypicalworkerinagivencountryusedtoproduceoneunitofagivengood.Opportunitycostonlyreferstowhatwegiveupwhenwemakethatchoice.Alternativesareatthecoreoftheconceptofopportunitycost.Thisactivityisdesignedtomakeadistinctionbetweentheconceptofopportunitycostandthetypicaltimetoproduceoneunitofagivengood.Thestudentsshoulddiscussthisingroupbeforethepresentationoftheanswerandtheexplanation.ActivityTwoRemindstudentsthattheopportunitycostconsistsoftheactualexpensesandtheearningsandexperiencesforgone.Theactualexpensesincludeexpendituresontuitionandbooks,butnotonroomandboard,whichyouwillalsoconsume