A government has enough money for one major project this year. Each project uses scarce resources, so choosing one means giving up the others. Compare who gains and what is given up.
Build a new hospital
- Patients: Shorter waiting times and better care, especially for older people.
- Workers: A healthier workforce takes fewer sick days, raising labour quality over time.
- Opportunity cost: The port upgrade and training scheme are not funded this year.
The hospital gives large health benefits now and some productivity gains later. The opportunity cost is the next best project, whichever the government ranks second.
Fund adult training courses
- Workers: New skills can lead to better-paid jobs.
- Economy: Higher labour quality shifts the PPC outwards over time.
- Timing: Benefits take years to appear and depend on workers taking up the courses.
Training raises the quality of labour, which increases productive capacity. The gains are real but slow, and they depend on take-up.
Upgrade the port with automated cranes
- Firms: Faster, cheaper shipping helps exporters compete.
- Economy: Better capital raises productive capacity, shifting the PPC outwards.
- Dock workers: Some manual jobs may disappear, so workers may need retraining.
The port upgrade raises the quantity and quality of capital. It boosts growth but may displace some workers.