Report

3. Use the example of the NHS to explain the concepts of scarcity, choice and
opportunity cost in a written report to hand in.

The aim of this report is to explain the concepts of scarcity, choice and opportunity
cost associated to the National Health Service of United Kingdom(NHS). We already
know that human beings have unlimited wants. And as the resources with which these
wants must be satisfied are limited, we can understand that ‘scarcity’ is the central
economic problem of everyone including individuals, business and the government,
and even the NHS.

If we decide and choose which want to satisfy with the available resource, then there
are other wants we have to leave unsatisfied, such as the example we did in class of
NHS which we have to abstain from something in order to satisfy a want. The want
that is lost is called the ‘opportunity cost’. It is also known as ‘the next best alternative’.

The concept of scarcity, choice and opportunity cost can be shown in many ways, at
different levels. For example, the NHS may involve choosing the best from the choices
available. For example, they may have to choose between doing Bone marrow
transplants which its cost is £70,000 and going for natural birth in NHS hospital which
is much cheaper. Choosing one option means the other option has to be refused.

A normative statement carries judgment. Normative statements are opinions. For

example, Liver transplant should be done instead of Hip replacement in the NHS is an
opinion.
Since they are opinions, they cannot be proven or disproven.
A positive statement, on the other hand, is a factual statement. They can be tested or
proven. These are objective statements. For example, 20 Heart transplant are done in
the NHS per year.