Economics and the Student, Essay Example

Economics is such a fascinating subject because of its scope. Economics is not just the study of the economy, as many people think when they first hear the word. Economics is the study of individual behaviors, group behaviors, how laws and policies affect our daily lives, how the past affects the present, how resources affect humans, and how the process of the natural world affects people. Mathematics also plays a role in economics because the economist must describe and analyze the data they collect. There are not many subjects that cannot fall under the study of economics.

While all of the above listed subjects can fall under the scope of economics, it does not mean that economics does not have a focus. The fact is that resources are not infinite. In fact, things like natural resources and time are increasingly scarce. This forces people to make choices and allot certain resources to different tasks. The reason that economics is such a broad subject is because it applies to any situation in which a person  makes such a choice. Alfred Marshall said that economics is “a study of mankind in the ordinary business of life.” I think that because economics applies to so many different situations and is such a broad subject, it is increasingly important for adults to understand the principles of economics.

There are five basic economic assumptions. The first assumption is that wants are unlimited, but resources are scarce. Thus, due to the scarcity of the resources, a choice must be made, and every choice has a cost. Everyone wants to make the cost as little as possible to brings themselves the greatest amount of satisfaction. Everyone must act rationally, comparing the costs and benefits of every choice. And the biggest economic assumption is that every situation in real life can be analyzed with data and graphs.

These economic assumptions explain the actions of many individuals and businesses. Some individuals attribute more value to money than they do to their personal life, for example. People that value money over their personal life will almost always choose work over family. Individuals that value their personal life over money will almost always choose their family over their job. The same concept can be applied to businesses. Businesses that value their reputation over profit will take a profit loss to maintain their reputation. The opposite is also true—if a business values tangible profits over intangible reputation, they will choose to cut quality to maintain profits. The same concept may even be applied to social policy. If a company must decide between making their customers happy and making a profit, their choice will completely depend on their perceived benefits and costs of each decision.

Because economics is such a broad subject, it is increasingly important for all individuals involved in any amount of buying and selling to understand at least the basic concepts of economics. As of yet, I have not met anyone who has not had to participate in some form of economic decision in their life. All people make decisions, and all people should understand why they make the decisions that they do.