Cartoon: Nagging

Cartoon: How to Get Personal Space

Cartoon: Opportunity Costs

Cartoon: Trade-offs and Opportunity Costs

Discussion Question: Opportunity Costs

Explain why economists argue that the optimal crime rate is likely greater than zero.

Here is what one of the students wrote:

People committing crimes creates a need for labour. There are more police officers needed to patrol the streets and make sure that all is safe. There are lawyers needed to defend clients involved in crime, and the judges to run the hearings. After that there are more jobs created in needing people to construct the prisons and more people are then needed to guard them. With all of these new jobs that are created by crime, these people will be bringing more money into the economy as well as increasing the demand for these positions.

Is this a good answer? Explain.

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The Cost of the Iraq War

What Does Iraq Cost? Even More Than You Think

You may recall that you got rid of your loyal White House economic adviser Lawrence B. Lindsey back in 2002 after, among other sins, he claimed that a war in Iraq might cost as much as $200 billion. At the time, White House staffers sneered that Lindsey was being alarmist. Hardly. One commonly cited estimate of Iraq's cost, based on an August analysis by the nonpartisan Congressional Budget Office, is $1 trillion, and that's probably on the low side. A report released last week by the Democratic staff of Congress's Joint Economic Committee put the war's 2002-08 tab at $1.3 trillion...

We often think of cost simply in terms of dollars spent, but the real cost of a choice -- what economists call its "opportunity cost" -- consists of the forgone alternatives, of the things we could have had instead. For instance, the cost of seeing a movie is not just the dollars you plunked down for the ticket, but also the subtler cost of missing a dinner at home or a cocktail party at work. This idea sounds simple, but if applied consistently, it requires us to rethink and, yes, raise the costs of the Iraq war...

Even if the wisest way forward is sticking to our guns, the constraints of politics and public opinion mean that we cannot always see U.S. military commitments through. Since turning tail hurts our credibility so badly and leaves such a mess behind, we should be extremely cautious about military intervention in the first place. The case for hawkish behavior often assumes that the public has more political will than it actually has, so we need to save up that resolve for cases when it really counts.

So, Mr. President,Lawrence Lindsey is gone, but exactly who else will end up getting fired?

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