Review on the Principles of Economics - Research Paper Example

Three discuss how the economy works as a whole; trade, interaction of households and firms in market economies, government intervention in the economy. The last three discuss how people interact; nation’s standard of living depends on its capacity to produce goods and services, prices rise when government increases the money supply and the economy faces a short-run tradeoff between inflation and unemployment. This topic gained my attention as I realized that economics is all around us and plays a vital role in our daily life activities.

It not only exists in situations like visiting the bank to deposit money or taking out cash from an ATM machine but also conditions like buying a small gift from our savings or watching the soccer match and not doing homework. My favorite topic was the concept of Opportunity Cost which is basically with reference to what is seen in opposition to what is unseen. This concept has a lot of depth attached to it. We are all aware of the direct costs of life. We experience them whenever we take out our wallet to pay for something like when we dine out and pay the bill, buy a drink, pay for the bus ticket, pay for our tuition etc.

However, we tend to ignore the unseen or the hidden costs that we have to pay for and the choices that we make regarding them. For example if a person buys a car for $10,000 there are many other things he could’ve done with that much amount of money. He could’ve invested it, or spent on travelling etc. But its on him to make the decision and choice as to what he has to give up in order to achieve something. So basically opportunity cost is spending our capital, time and energy on one thing in substitute of another thing.

In order to decide this, our decision making skills and preferences come into account. I have learnt that every choice or decision that I make always has an opportunity cost attached to it and it is not necessary that the cost is easily seen. The cost can be unseen as well. Like I had saved $100 and could not decide as to where should I spend them. It could be spent either on partying with my friends, or shopping for me or buying books to read. I can even save them up instead of using them all.

Furthermore this concept taught me how to measure the benefits of every activity that I decide to do. Like when I have a couple of hours relaxing time I have to make choices as to what should I do? Whether I should read, sleep, watch TV, listen to music or talk with the family. Then I calculate the advantages that I obtain from each activity. This process exercises my brain and helps me decide as to what I should carry out. I learned that the option which brings the most overall benefits to my life is the finest choice and the accurate thing to do.

Most importantly, by studying this concept I have learned to value time and I have realized its significance. In every situation I find myself calculating and thinking as to what can be the best thing I should be doing right now? Am I spending time in the right place? By developing this mindset I have learned to take improved decisions that facilitate me in making my life and lifestyle healthy. I intend to study and become acquainted with the economic concepts that work at macro level. I want to improve my knowledge and understanding about the global affairs and how economic activities dominate and regulate all the