1. Suppose you were having lunch with your best friend who just enrolled in an economics class. He was complaining about how irrelevant the class was, commenting that he saw no useful purpose for economics. According to your friend, â??Iâ??m a nursing major. I will never use this stuff in the real world." Having just completed the same course in economics, you try to explain to your friend that economics affects everyone! How would you explain to this person that economics is a daily part of his personal and professional lives? Use at least three examples of microeconomics and macroeconomics in your response.
2. In economics, the demand for a product is considered downward sloping. This implies that demand increases when price decreases. Is this always true? Name some products for which the demand remains unchanged regardless of the price. Also, mention some products for which demand increases when the prices increase. Give appropriate examples and justify
1. Three examples of economics that effects daily lives
Examples one: Consider the concept of "opportunity cost", which you may use to assign monetary values to activities/object which are not priced.
Opportunity cost means that in order to do something, you must give up something else (usually in the form of time). For example, college tuition is $5000/year. So does that mean if I decided to attend college, then I value one year of college education to be greater than $5000 (in economics, we believe people take action if they thinks that the benefit is greater than the cost)? If you add the cost of time, you will see that one year of college education is much greater than $5000. Let me now ask "what would you do if you decided not to go to college?" Say if you can go work at McDonald's for $20000/year. Here you can see that by going to college, your cost is $5000 tuition + $20000 (opportunities cost) which is $25000, this means that you value college education to be at least greater than $25000/year.
Example two: The concept of sunk cost
Let us consider such a situation. You got a ...