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Opportunity Cost Essay

Investigation: Using local knowledge, newspapers, sources such as council publications etc, write a short report outlining a resource allocation decision made by the local authority resulting from the basic economic problem. This report should include the background to the decision, a production possibility frontier to show the consequences of the decision, and an evaluation of effects of the decision on the local community.

I have decided to investigate, the resource allocation decisions made by my local church, which have recently invested in demolishing an old church hall, and building a car park/football pitch.

I spoke to several PCC (Parish County Council) members of the church, also the vicar, several churchgoers, and a member of the local community. All of these will help me in my investigation on the local church.

The church received a legacy of one hundred thousand pounds. The church wanted to spend this money on something worthwhile. I am now going to go through the following allocation decisions the church had to go through. They had several options in which to spend this money.

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Firstly they could have spent the money on new lighting in the church, the need for this, is the fact that the church is very dull, or it does seem compared to the new church hall they had built a couple of years ago. An advantage of having new lighting would be that it would face the electrical problems, which are the safety and legal aspects. The disadvantage is that it may not be justified to spend that amount of money on something they wouldn’t be too sure how much it would be valued.

Another option would be to convert the loft in the church hall in to offices. The need is that the church needs more offices for staff to do administrative work. The advantage is that it makes use of an area that is basically ‘dead’ space at the moment. The disadvantage and a potential problem is that the building regulations mean that the space available was not suitable for the need.

Another option is to set aside the capital for a new youth worker. The need for a youth worker is essential as the youth churchgoers are increasing rapidly; therefore they need another person to work with them. Putting this investment away would be good for a safe future. The advantage is that it is an investment into people rather than plant. Which is what all the other options are. A disadvantage is that the provision of a youth worker should come from general church giving rather than a one-off capital gift.

Another option is the car park and football pitch. The main need for this is that there is an increasing amount of people coming to church in cars, the church does not want to refuse these people in cars, and therefore building this car park would solve their problem. The advantage is that it is a dual combination of car park and football pitch; it wouldn’t just be used as a car park on Sundays but as a football pitch during the week. The disadvantage would be knocking down the old church hall, which is a very old and run down building, but it is a sentimental value to many of the elderly people at the church. It is also a listed building; it is protected by the Victorian building trust, which protect these building as part of our heritage.

The Final option would be re-doing the heating in church. The need for this is to follow through on the complaints made my churchgoers about the temperature in the church. The advantage is that it meets the need for heating, and it means that all the heating appliances are covered on safety grounds, and also it is the cheapest option, which would leave some money left over. A disadvantage is that although it is desirable it is not essential, which brings us back to the basic economic problem, our: –

Wants Needs

The decision was as you are well aware is that it was spent on the church car park and football pitch. The PCC who I spoke to said that they opted for that use, as they thought it would give immediate use, and would provide a social resource for church goers and the local community.

The Vicar would like to budget for all his and the churches wants, but is content with the major need that has been met.

A Churchgoer who I spoke to was astounded at the cost, but thinks it is being well utilised.

A local resident, is pleased to see this happen for the community, but feels the noise level of the football pitch is intrusive, when trying to relax.

This resource allocation is a perfect example of opportunity cost, and shows very well the basic economic problem that wants are greater than needs. The opportunity cost in this situation would be opting for this decision rather than any of the others; they have missed out the lighting, heating, loft-offices and the investment in a youth worker.

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