What is Economics really about?
Unfortunately, we all live in a world that has to deal with scarcity problems. For example, we would all like to receive higher incomes to enable us to buy essential products such as housing, food, education and healthcare. All of us also want more money to enable us to buy more luxury products such as technology, foreign holidays and designer label clothing. Unfortunately, limited supplies of these products means that we often cannot purchase everything that we would like!
It is therefore the role of the economist to decide how we allocate these scarce resources to all of the people within our society. For example, should we all receive equal access to money, which would then enable us all to access the same level of products? OR should products be allocated in a different way, for example based on who needs it the most, or based on merit, i.e. who has earned it the most?
We would now like you to have a go at a resource allocation activity, which will teach you the role of the economist in society and why allocating resources is a difficult job to do!
These machines are used in hospitals to treat patients who have kidneys that don’t work properly. Without dialysis the patient would quickly die. These machines are extremely expensive, so are very scarce in hospitals. Some patients can receive a kidney transplant, which means that they would then no longer need the machine once they have received their transplant.
In one particular country, they only have one dialysis machine which can be used for a maximum of 30 hours per week (if it was used any more than this, then it would be over-used and would end up damaged). There are a number of patients that need to use the machine each week:
1. Based on the information above, allocate your 30 hours:
- List the patients who will be granted access to the dialysis with a brief justification
- List the patients who will not be granted access to the dialysis machine with a brief justification
2. Why is this a difficult decision?
3. What additional information would you need in order to make your decisions fairer?
Economics is an extremely topical subject which allows us to constantly apply taught theory to real-life situations. I would therefore like you to read this news article and then answer the following questions:
1. How much money did the government have to borrow in April 2020?
2. Why do you think the coronavirus has meant that the UK Government is having to borrow so much money?
3. What are the future problems for society of the government building up such high debt levels?
4. Why is reducing government debt a very unpopular/difficult thing to do?