Basics of Microeconomics - Essay Example

Rational Choice In accordance with the economic concepts and the very basics, when people conduct actions in an economic setting or set-up, the actions taken by individuals tend to be more towards the rational side rather than otherwise. By this it is meant that when people make a decision to buy or sell something they fully understand the reason why they are taking this course of action because they have weighed their costs against the benefits of the decision that they have taken. For example if I think that a chewing gum if not worth having or it does not give the satisfaction inline with its cost I would never buy it. 1. For consideration of staying at school rather than dropping out and following the great legends who followed that very path, there can be several reasons that any individual might give based on their respective mindsets and frameworks. My personal reason for staying back and not dropping out is the fact that I believe this is what should be done, as it secures my future. There might have been billions and millions of drop outs from universities world wide on a regular basis. However, the success stories of just a few are known and the failures of the rest remain an unreported story. The world today is of education and the cost beard today would definitely yield a better and higher return and reward in the future. Thus, I belief that I have applied the right concepts of economic rationality and opportunity costing, i.e. by foregoing the current opportunity to seek a better one in the future. 2. There have been success stories of individuals globally, very few though, dropping out from high school or universities and then moving on to do something big, each having a different feeling in their hearts and minds regarding their then taken step. But the common thing in each was their self-belief and self-confidence in terms of the fact that by withdrawing themselves from the educational arena, they believed that they could achieve something that they won’t have been able to otherwise. In case of Bill Gates, he probably quit schooling because he felt that his expertise lay in something which would not be taught by school and the cost that he is bearing today will not result in a higher yield for the coming years and hence he decided to save time by dropping out. Thus, his belief was different than mine. He felt his opportunity cost was higher than mine is; different people, different mindsets, different nature, thus, different thoughts. 3. People quit school after the 12th grade because they feel that the costs of going to a university is just too much and wouldn’t not help them in the long run in any way and hence they feel the benefit of university education is less than the costs that they have to incur, with this in mind most of the students drop out. Applying the same concept of opportunity cost as Bill Gates did, it’s interesting to see that though applying the same concepts, yet there is just one Bill Gates in the world. 4. The government has an important role to play in this sector as it does in all other sector but what the government could do is that it could subsidize university studies so that the costs lower, what this would do is that it would attract students who were previously quitting school because they thought that the costs that they incur does not equal the benefits that they receive. The government could also make its own state level universities which would be subsidized heavily and hence the costs of attending a university would go down drastically, the quality of the education should not be affected though. Marginal Costs The term marginal comes from the concept of margin i.e. extra in literal terms; accordingly, marginal cost implies extra cost, marginal benefit implies extra revenue, and so on. The classical definition of marginal costs is that it is the cost incurred on each extra unit of production, however, the perspective taken into consideration for this particular case is as it applies to the extra degree or course or year that you put into education. Following are the brief responses through the application of the same concept to the case under consideration: 1. The decision that I have taken is based on the fact that the education that I receive and the extra costs that I have to bear in order to receive this education but the marginal benefit that I receive from this cost is much more greater than the marginal cost it self and that is why I have decided to stay back 2. Bill gates felt that the costs that he would be incurring on each extra course would not equal the benefit that he receives and hence he decided not to continue with the education. 3. People quit for the same reason as Bill gates did because they feel that the marginal cost is not equal to the marginal benefit of gaining the education imparted at these institutes. 4. The government could subsidize the university studies so that marginal benefit exceeds marginal costs and more and more people are inclined to join colleges and universities. In situations and circumstances otherwise, the government can also push towards having specialized training programs within the university arena. The major part is appropriate marketing of these programs, either subsidiary or specialized training programs; appropriate marketing would imply people knowing how important education and training is for any sort of work, no matter how technical it is in nature. Part 2 1. The wage rates of the unskilled workers went down because there was a demand for skilled labor only because of the new technology that was being used the mill owners now required only those people who knew how to operate these machines, so as there was little or no need for this unskilled labor they were sidelined. Since productivity goes up the cost of producing each unit goes down as well and hence producers want to push the costs further down by lowering the wages. 2. Training is something essential for workers at all levels to enhance their working habits and productivity on a general note. Technology training is more towards training the workers to make most of the applied technology, and as known, technology itself is very beneficial for enhancing productivity, the outcome of the combination is fantastic for the firm itself. Workers that have been trained in the usage of this new technology would definitely benefit because there demand would go up and the shortage would definitely drive up their wage rate, so the workers with the most technical know how would benefit the most. Alongside, it is also a food for thought that technical know-how specifies or restricts the area of expertise into specialization, which is of course needed in the present world. For managerial considerations however, the generalization is much more important that requires lesser technological know-how rather than deep in-sights. 3. The action of luddites affected the workers in an adverse manner because mill owners would be very reluctant to give jobs to the very people who have destroyed their machinery and would not want to give in to their demands because that would hinder any technological progress in the future as well. This was a point which luddites over looked but he did not have any evil intentions the point was that he wanted people to know that these workers should and would not be neglected hence they should be trained in the technical aspect of their jobs as well but for the time being no one would want to employee these people because of their acts and lack of technical know how. It is also worth mentioning that at this point in time more than 70% of the labor had been employed in the cotton mills because this was the most lucrative business at that point of time and many a countries were basically based on agricultural produce so this was a very huge number and not just a very small group of people who were working in their own interests. 4. The reason that these acts should not be carried out is that this would not lead to any where because employers would be reluctant to give jobs to people who decide to take the easy way out, ludd should be looking to train people in technical terms and not looking forward to destroy the machinery because this would not help, it might delay the progress but it will never stall it for an indefinite time period and hence this only destroys the reputation of ludd and all the other people that get involved in such acts. Bibliography 1. Stanlake, G.F. Introduction to Economics. 6th edition, 1996. Read More