ARTICLE

Why Study Economics



Why Study Economics

Introduction

This article talks about the importance and application of economics in routine life. The study of economics is considered as highly methodological and complex with its applications restricted to economists and analysts only. People tend to underemphasise its significance in the daily life and activities. The usage of several economic terms in real life and routine activities is elaborated in the different sections of the article. The main purpose of the writer is to make us realise the fact that economics is not a study which is meant for technical or economic analysts only. It has numerous applications in individual's routine life as well. The author has utilized the style of exposition in developing the text of the article. The central idea behind the composition of this article is to facilitate the learning of fundamental principles and facts of economics, significance of the study and application of important concepts.

Discussion

The first section talks about the application of opportunity cost in our daily life. It is defined as the cost of the next best forgone alternative. In terms of economics, the cost of selecting one out two investment ventures is the opportunity cost. The best alternative is selected on the basis of the marginal concept of marginal cost and utility. In economics linguistics, marginal cost is equal to change in total cost per change in quantity. The author has applied this phenomenon in real life by quoting an example that he wrote three drafts before finalizing this article. He did not prefer to write a fourth one because the cost of writing in terms of time was high than the importance and worth of the work. Similarly, from a student's perspective, the time spent at studying management is the opportunity cost of studying social sciences at the same time. It depends upon the importance of the course and priority in terms of examination. This rule applies to students, housewives, assignments, events and other aspects of life.

In the next section, the author has extended the application of opportunity cost to law of diminishing marginal returns. According to this law, the utility of achieving anything decreases with time. He quotes an example that when a child joins elementary school, he is full of excitement and enthusiasm. As time passes and he get involves in different other and extracurricular activities, the importance of education and core study diminishes. The author has applied the technical concept of economics to individual's daily life.

In the following section, author has elaborated the concept of marginal analysis which he refers as the application of marginal thinking to a particular problem. He has compared it with the importance of thinking in terms of sunk cost. Sunk cost refers to the cost which cannot be recovered. In the context of real life, it is useless to think in terms of the cost or time that cannot be recovered or have been of a very healthy use. On the other hand, marginal analysis means thinking ...