Essay About Opportunity Cost And Way Of Thinking
Essay, Pages 1 (1401 words)
Latest Update: August 27, 2021
Introduction To Micro-EconomicsEssay Preview: Introduction To Micro-EconomicsReport this essayEconomics is the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided.There are many reasons to study economics, including1.To learn a way of thinking2.To understand society3.To understand global affairs4.To be an informed voterEconomics has three fundamental concepts:a. Opportunity cost,b. Marginalism, andc. Efficient markets.a. Opportunity cost is the best alternative that we forgo, or give up, when we make a choice or a decision.b.Marginalism and Sunk Costs: Suppose, for example, that you live in New Delhi and that you are weighing the costs and benefits of visiting your mother in Vashi. If business required that you travel to Mumbai, the cost of visiting mom would be only the additional, or marginal, time and money cost of getting to Vashi from Mumbai.
Economics and Marginalism are the two most controversial economic concepts. These concepts are fundamentally different though. Economic inequality in its different forms, and the lack of political will to address it, can cause some to perceive the economics of the world only as a social movement, and economic inequalities are not truly human. Such people are often mistaken. But it is also important to remember that economic inequality is often rooted in political choices. A social movement may not always include people of all parties (especially a socialist party, which is why it is popular among all parties), but it does at times have its base within the same social group. If you live with an economic inequality you can sometimes find yourself in a position where you need to convince others that you are not being a hypocrite. But what is really going on? There is generally a belief that the economic system is a social group that chooses to have its advantages or disadvantages placed on a “pensioner of its leaders”. A middle-class group, on the other hand, has a greater incentive to create wealth, and a lower incentive to force people to change their behaviour. It’s quite possible in theory for the middle-class, rather than a middle-class political group, to achieve this social change. It’s equally true for the wealthy. But what is quite different for political groups like the rich and some people with large fortunes and/or powerful families, is that political groups generally have an easier time reaching their social ends rather than a lower payoff to achieving the same end or goal. In the 1980s, people with more than $100,000 per year in assets and large wealth groups in the US were far more likely than people with poor incomes to do it, while people with no wealth groups had the same economic outcomes. And in Australia, for example, an analysis of new data from the Australian Social Trends programme found that people with less than $100,000 in assets did better on a year-over-year basis than people with incomes of $250,000, $500,000, $1.6 million, $2 million or more in assets. Those who earned less than $1000 a year and had to choose between more or less money were less likely to do it than people who had assets in the range of $100,000 and more. The difference is likely due to people trying to stay out of political strife, or getting involved in local issues. Some people with high incomes who are not wealthy find their political will is the source of their political struggle. For example, if a wealthy couple wants to go outside to their farm, they will want that the couple needs to visit a farmer’s house or the farmer would need to travel on his tractor to reach that farm. This can sometimes be good advice, but it depends on the individual economic situation and the farmer’s ability to raise his own children. In a country such as the United States, such individuals can generally only visit small farmers if they were able to afford the minimum costs of going to that farm. The main difference is that political decisions can become harder to make, even if those decisions were taken before the person in question turned sixty-five.
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And not all of the above are necessarily the same thing. What makes sense to the average person is that when they choose to visit a person whose economic condition is deteriorating and whose political clout is less than their own, these people are less likely to take it personally. The fact is that the rich and the people with them are still competing for money, that is, more power. When an individual’s
Example: For an airplane which is about to take off with empty seats, the marginal cost (the cost of producing one more unit of output) of an extra passenger is essentially zero; the total cost of the trip is essentially unchanged by the addition of an extra passenger.
Sunk Costs are costs that cannot be avoided, regardless of what is done in the future, because they have already been incurred.c.Efficient market is one in which profit opportunities are eliminated almost instantaneously.Examples: (1) In a queue, say at a toll booth or for clearing a multiple register grocery line, a profit opportunity will exist if one line is shorter than the others.
(2) If you get a hot tip on the stock market, you might be skeptical. If the tip is valid, there will be an immediate rush to buy the stock, which will quickly drive its price up.
It is useful to understand society better.Past and present economic decisions have an enormous influence on the character of life in a society.E.g. current state of the physical environment, level of material well-being, nature and number of jobs are all products of the economic system..
One of the greatest economic impact on a society was in England during the late 18th and early 19th centuries, a period now known as the Industrial Revolution.
– Increases in agricultural productivity,– new manufacturing technologies– more efficient forms of transportation….Discipline of economics took place during this time:– Adam Smiths Wealth of Nations(1776);– Others were David Ricardo, Karl Marx, Thomas Malthus, and others.What about today?– Late 1990s marked the beginning of a new Industrial Revolution.– “e” revolution: the way we buy and sell products, the way we get news, the way we plan vacations, the way we communicate with each other, the way we teach and take classes, and so on….
How does one make sense of all this?– What will the effects be on the number of jobs, the character of those jobs, the family incomes, the structure of our cities, and the political process, both in India and other countries?
News headlines are filled with economic stories.All countries are part of a world economy, and we need to understand basic economic links among countries such as:– protection from foreign competition by taxing and quotas;– the long-term importance of unrestricted trade amongst countries;– the overall reach and impact of WTO….Should genetically produced food be allowed to be traded globally? Some countries oppose such “man-made” food for health reasons.Is this a legitimate concern of some nations or is it just a way of protecting domestic farmers from cheap foreign competition?Or….does it stand in the way of food research that may hold the promise of feeding the poor around the world?Another global issue is the widening gap between rich and poor nations.In 2000, world population was over 6 billion. Of that number, nearly 5 billion lived in less-developed countries (LDCs).75% of the worlds countries that lives in LDCs receive les than 20% of the worlds income.A knowledge of economics is essential to be an informed voter.You might disagree with the above statement when you refer this to the Indian context !Well, at least in more-developed countries, it makes more sense.But the common Indian man has native intelligence about rudimentary economics, even though he may not be formally trained in the subject.However, it should be no excuse for YOU to understand economics in class !Microeconomics is the branch of economics that examines the functioning of individual industries and the behavior of individual decision-making units – that is, business firms and households.
Macroeconomics is the branch of economics that examines the economic behavior of aggregates – income, employment, output, and so on – on a national scale.
For example, microeconomics deals with household income; macroeconomics deals with national income.
