On April 8, 2021, twenty-seven students from seven Arkansas high schools met virtually to compete in the Arkansas Economics Challenge! Winning teams from this competition are eligible to advance to additional stages of competition with other high school students from all over the U.S. The Arkansas Challenge was made possible through generous financial support from the Council for Economic Education, as well as support from Economics Arkansas and the Arkansas Center for Research in Economics.
The 2021 Competition was split into three divisions, a Team Testing Competition, where teams of students completed an economics exam focused on key concepts from micro, macro, and global economics, a Writing Competition, where individual students submitted writing samples under the topic “Thinking Like an Economist,” and a Digital Design competition, where students were asked to create digital projects that highlighted economic concepts.
Missed the event? Watch highlights from the competition on our YouTube Channel!
Team Awards:
Adam Smith Division:
1st Place: Bentonville West High School
Educator: Skyler Wiens
Students: Ananya Vangoor, Karina Batra, Maanasvi Kotturi
2nd Place: Haas Hall Academy
Educator: Rebecca Luebker
Students: Ellen Zhang, Kathryn Bell, Jon Sanker, Ryan Troung
David Ricardo Division:
1st Place: Arkansas School for Math, Science, and the Arts
Educator: Carl Frank
Students: Alec Gatewood, Bryson Austin, Pierce Hickey
2nd Place: Haas Hall Academy
Educator: Rebecca Luebker
Students: Ian Popp, Thomas Walker, Henry Szalinski, Kyler Pitts
Individual Awards:
Writing Contest:
1st Place Writing Submission by Karina Batra
When most students walk into their respective economics classes, they have this idea in their minds of what economics is supposed to be. They envision stock markets with red and green tickers dancing across a black background. They envision creating neat budgets that will teach them how to save. They envision so little compared to the grand scheme of what economics truly is. At the simplest level, economic thinking is about the study of scarcity. It’s about the fact that there is a finite amount of resources available yet we have an infinite amount of wants or desires for those resources. In today’s world, scarcity is prevalent in so many different ways, including the recent scarcity of covid-19 vaccinations that struggles to meet its demand. Furthermore, scarcity is also prevalent on a smaller level when your local grocery store runs out of bananas. Thus, economics must be used to decide how society functions in a way that makes the best use of these very limited resources.
When economists deal with scarcity, they think “on the margin” as opposed to looking at the total sums. Imagine you are looking at a flower through a microscope. At first glance, you see the flower and you believe that flower to be beautiful yet mundane. However, when you zoom in, you see the intricate and elaborate details that amaze you, and then you believe the flower to be simply stunning. In this same manner, economists zoom in past the totality and look at the cost/benefit of each additional or marginal resource. Using marginal analysis, economists can find that crucial moment where their costs are exactly or almost equal to their benefits, thus maximizing profits. With regards to scarcity, economists find that specific point where they use the exact amount of resources necessary, and in this way, scarcity is diminished.
Another key component of economic thinking is the idea of opportunity cost. Opportunity cost is essentially the next best alternative to any choice or decision made in economics or even in real life. For instance, consider a high school girl deciding to stay in a dorm at her university as opposed to staying at home with her parents. Staying with her parents is an opportunity cost or tradeoff since it is cheaper, but she also considers the fact that her little brother may annoy her at home, her friends may make fun of her for staying at home, and she concludes that paying for a dorm is her best option. Her opportunity cost was to stay at home, but she had to forgo it because she valued living in a dorm more. Now connecting opportunity cost back to scarcity, economists always make choices with lower opportunity costs so they make the smallest sacrifice possible. This, in turn, means that by understanding the economic way of thinking, businesses, governments, and individuals can make better choices that reduce decision-making costs and more efficiently use scarce resources. This concept is especially relevant when it comes to trade. A simple but effective example to consider is the USA’s trade of wheat for Brazil’s sugar. The USA has a lower opportunity cost for producing wheat and vice versa for Brazil. These lower opportunity costs stem from each country’s advantages in terms of climate, land, natural resources, etc. Both countries could produce both goods, but instead, the countries specialize in the good they have the lowest opportunity cost for. Thus, when Brazil produces sugar and the USA produces wheat, both countries benefit, and scarcity is minimized. Furthermore, economic growth is achieved since both countries are being more productive through trade. When economists consider and minimize opportunity costs, scarcity is curbed and the world truly becomes a better and more connected place.
Additionally, economists also look at the value of every decision they make. Using that “on the margin” thinking, they find the ideal level of benefit provided by a good or service and thus gain the most value. Furthermore, they even look for incentives or motivators (often financial) that add value to their decisions. This can be applied to the idea of positive externalities where a situation benefits someone other than the original decision-maker. For example, when you consider a flu shot that helps the whole of society, there is actually not enough quantity being produced. However, economists and the government realize the value of having everyone vaccinated, and thus flu vaccinations are subsidized, meaning the government offsets the cost to encourage more people to get vaccinated. While the government does understand that subsidies cost money, they place having healthy, vaccinated people above that trade-off. On the other hand, economists also look for when a good or service loses value, and then they try to figure out what to do about it. For instance, consider a business producing a good but the price of that good falls and they begin incurring a loss. At first glance, the answer obviously seems that the business should without a doubt shut down because they are making losses. However, economists know that losses alone don’t encompass the whole picture. Instead, the firm should only shut down if the price of their product is lower than its average variable cost (AVC). This AVC quantity represents the costs of resources like labor, electricity, water, etc. that can be adjusted. Why does this rule apply one might ask? Well, when you think about fixed costs, businesses have no way to get those costs back. They are essentially sunk costs and don’t matter when a firm decides to shut down or not. Economists narrow in on the variable costs (which can actually be changed) to determine whether there is value in that firm shutting down or not. When economists capture greater societal value through their methods, they reduce scarcity by making sure that every penny counts, both literally and figuratively.
In conclusion, economic thinking is indeed about scarcity, but it is also about so much more than that. The beauty of economics is that it integrates such a wide variety of situations that can be applied repetitively. Economics can be used for monopolies, oligopolies, governments, individuals, and the list goes on. Economics is fundamentally a way of thinking that seeks to improve the world by making sure that every resource is used in the most efficient way possible. While economics may seem simple, when you really dive in and learn everything, you find that economics is actually complex because of how applicable it is to our daily lives.
1st Place: Karina Batra, Bentonville West High School
2nd Place: Hemali Gauri, Haas Hall Academy
Digital Design Contest:
1st Place: Ananya Vangoor, Bentonville West High School
2nd Place: Karina Batra, Bentonville West High School
Student of the Year:
Karina Batra, Bentonville West High School
Teacher of the Year:
Skyler Wiens, Bentonville West High School
Library Fund Award:
Haas Hall Academy