Economics is not our stuff. It’s the job of economists : this is what people generally assume. But this is not true. Yes, economists only form various policies and give suggestions for the economy to work better. Economists helps to bring the market in equilibrium, makes it stable, set the prices accordingly, use the available resources efficiently, and etc, etc.
But is this enough? Is this the only role that economics plays in our life? Is that only ‘economists’ should understand economics and apply it?
The clear cut answer to this is NO. Every single individual understand economics and should know how to apply it. In every decision and transaction we make, the concept of economics are applied. Economics play a very vital role in our day-to-day life. Let’s take some simple situations from our daily life; whether to go and have dinner in good restaurant or spend this money on shopping ; whether to buy more of tops or more of dresses ; whether to go out for a party or stay at home and sleep ; whether to go and watch a movies whose tickets you have already bought or to complete your research work which you will have to submit next day. Almost everyone of us face these situations in our life. But our choices and decisions may differ from others because of the change in taste and preferences. Now let’s see how economic concepts our applied in these situations.
* When the person will have to decide whether to go to a restaurant or go shopping, he will prefer to choose an option which will provide him higher level of satisfaction, which involves the concept of MARGINAL UTILITY .
* We all have limited income, we just can’t have everything we want. Thus in order to have more of tops ,we will have to have less of dresses. This involves the economic concept of TRADE OFFS.
* Deciding upon whether to go for a party or to sleep at home ,involves the concept of OPPORTUNITY COST, which means to let one thing for the other. Sleeping at home is the opportunity cost of not going for a party.
* One the very important concept of economics is SUNK COST, which means if something is gone its gone. Means the price that he paid for the ticket is gone, thus, to make a rational choice he should prefer to complete his research work.
Hence, the economic concepts play a very important role in our daily life and helps in making a more rational choices.