ADM 614 Discussion Question 1 Topic 1, The Economic Perspective

ADM 614 Discussion Question 1 Topic 1, The Economic Perspective ADM-614 Topic 1 DQ 1- The economic way of thinking requires administrators to incorporate... Economics for Public Administrators - The Economic Perspective GCU 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 1 When making a trade-off, public administrators, or anyone else in charge of personnel and resources within a company or organization have to compare the trade-offs and the opportunity costs. If sacrificing one of your resource to gain another is going to end up costing to much financially or with the number of personnel dedicated to certain tasks, then the opportunity cost is going to be too high. If you have more of one resource than another, then clearly it is in your best interest to make a trade-off to even out your resources as much as possible. An example of this would be, a manager has a team of ten people that on average finish all their daily tasks right around the eight-hour mark of their work day. So their time management works out to where on most days they finish what they need within their allotted time. One day upper management gives you and your team a special project that requires the work of two employees all day for a week. Does the manager weigh the cost of keeping the other eight members for ten hours a day in order to make up for the lack of man hours. Considering that production goes down adding in more hours than normal in a day and the cost of paying each employee ten hours of overtime vs. being a day behind in a week. I would keep the employees longer. The opportunity costs is worth the trade-off. Opportunity cost of an action is the highest valued option given up when a choice is made(Gwartney, et al., 2015). Sometimes there is no right or wrong answer when what the opportunity cost is. The cost can be something that is opinion based, but there is a way to put an actual value on what the opportunity cost is. Gwartney, J. A., Stroup, R. L., Sobel, R. S., & Macpherson, D. A. (2015). Economics Private and Public Choice. Stamford: Cengage Learning. ANSWER 2 Economics is defined as “scarcity and the choices we have to make because our desire for goods and services is far greater than their availability from nature” (Gwartney, Stroup, Sobel, & Macpherson, 2015, p.4) understanding this ideology helps differentiate one’s needs verse one’s wants. For example, I desire to own a luxurious automobile (BMW 300 series) but I have not accumulated enough finances to own and keep up with the maintenance on one. As a result, I must settle for what I can afford. At the moment, it is a 2004 Saturn Vue. In our discussion we examine the first of the “eight guidepost to economic thinking, this guidepost is “the use of scare resources” the value of it and what public administrators must trade-off as when assessing opportunity cost. I am not familiar with the role of a public administrator, but from what I have been able to gather from our text; is that trade-offs is decisions being made that if you pick any of the options the others must be sacrificed. Gwartney, Stroup, Sobel, & Macpherson mentions the reasoning behind tradeoff as resources are scarce only one choice can be made to produce that good. Opportunity cost - “the highest valued alternative that must be sacrificed as a result of choosing an option.” (2015, p.5). It is believed that sacrifices must be made in order to be able to attain a good. An example can be purchasing a new computer for the office or paying an outstanding utility bill. When making this sort of decision one must take a few deciding factors into consideration. A person may want a new computer that is set at an unbelievably low price for Black Friday, but it would be more reasonable to save a more and pay the outstanding utility bill before the lights or gas is shut off. Reference: Gwartney, J. A., Stroup, R. L., Sobel, R. S., & Macpherson, D. A. (2015). Economics: Private and Public Choice (15th ed). Stamford, CT: Cengage Learning. ANSWER 3 The idea of a trade-off is based on the understanding that there will have to be an exchange,get something and receive something in return(Gwartney, Stroup, Sobel, & Macpherson, 2015). For example in order for someone to eat, the trade-off is to spend money on food and time to cooking the food. The textbook describes opportunity cost as “the highest valued alternative that must be sacrificed as a result of choosing an option”(Gwartney, Stroup, Sobel, & Macpherson, 2015, pg.7), for example the time and money used to eat is not used on other things a person needs. In basic terms the connection between the two boils down to foregoing something and having something in return for that sacrifice. For public administrators, they have a specific amount of scarce resources on hand to accomplish the duties they are responsible for. So say the task was to improve the conditions in a city’s school, education administrators would first have to look at the problems that school is facing. From there those administrators have to decide how to solve those problems within the limitations of the scarce resources they have, which requires looking at tradeoffs and the opportunity cost that go with solving those specific problems. Ideally the problems that are solve are the ones where the trade-off does not have a high opportunity cost and are necessary to solve. The system is not perfect, but with a astute mind and having the knowledge of this economic connection a public administrator can do well in finishing the tasks for the community they work for. References: Gwartney, J. A., Stroup, R. L., Sobel, R. S., & Macpherson, D. A. (2015). Economics: Private and Public Choice (15th ed). Stamford, CT: Cengage Learning.