When I first started this course a few weeks ago I had no idea what Macroeconomics was about, and I had no interest in learning the subject. When I first started reading the first chapter in the book, I thought to myself “Boy this was going to be a long semester”. However, as I read through each chapter and started to complete the assignments in Mind Tap along with responding to the questions and reading the responses on the discussion board, I found that I was starting to gain a more of an interest and a greater knowledge of the Ten Principles of Economics found in Chapter One.
I didn’t realize that economics is something that can be applied to our daily lives.
Economics is a social science concerned with the production, distribution, and consumption of goods and services. Economics can be viewed as a social science because it uses scientific method to build theories that can explain the behavior of individuals, groups and or organizations.
After taking this macroeconomics course, it became quite evident that everyone is affected in some way by macroeconomic issues such as inflation and unemployment. I can easily relate to one of these issues. I was working part-time for Papa Gino’s when they decided to file bankruptcy, everyone that worked for that location was laid off abruptly including myself. Sometimes in life we are faced with unexpected problematic issues, but life goes on, so we just must pick up the pieces and keep going.
Throughout this paper I will be applying economics to my everyday life through personal experiences and or situations. I will discuss things like opportunity cost, how people respond to incentives and more. To get things started I would like to start off by demonstrating how real-world economics can be applied by using two different types of statements. Positive statements which are statements that can be verified and known to be factual. An example of this would be “Government-provided healthcare increases public expenditures. On the other hand, there is normative statement, which are subjective statements that carry judgement on the way something should be.
This is very much relatable in the real-world, I can think of many times when I have made normative statements. For instance, I was talking to my neighbor about healthcare insurance and because his employer didn’t provide healthcare insurance, he would have to pay out of pocket for his medication that cost him over two hundred dollars a month, he was having a hard time affording his medication that he needed to take daily. Healthcare should be provided for everyone, especially those whom cannot afford it on their own. No person should go without much needed treatment or medication. It should be either provided by the government or should at least more affordable for people who otherwise cannot afford it.
Throughout this semester there were several articles and discussions in Economics. I believe that I was very fortunate to have taken this course because it has taught me a lot about things that may be essential to everyday life. Thinking back on some of these issues we face in the economy, I realized that there are things I have experienced or my experience in the near future.
People responding to incentives: What if there were no consequences that came along with not wearing belt, or what if you were to work out every day of the week but you could never gain muscle or lose weight would you still do it? What if you were asked to go to work 5 days a week but never receive a pay check? These are all examples of scenarios in which there are no incentives in place, therefore how do think people would respond? Or would they even respond at all? Most of the times our actions are proceeded by incentives. What do I mean by this? Think about what would happen if there was a $1500 fine if you did not wear a seat belt or what if you got paid $150 an hour to go to work for 6 hrs. People are more likely to respond to incentives.
Economically this can be explained as a higher price in the market that provides an incentive for buyers to consume less and an incentive for sellers to produce more. The most notable incentive in economics is price. Price acts as a signal to suppliers to produce and to consumers to buy. People always seem to be seeking sales and who could blame them, who wouldn’t enjoy a sale?! The idea of lowering the price makes the purchase a better idea for the customer. The sale seeks to convince the buyer to change their action, hence buy the product.
In comparison when price is increased it acts as an incentive for producers to produce more. If the supplier thinks that they will be able to sell their product at an increased price they will be more inclined to produce more of the product. Price acts as an incentive to customers which enables them buying and for suppliers, it keeps them producing.
Often, we go about our daily lives not really taking into consideration the many things that we are fortunate to have, what would be like if we did not have them. An example of this would be water. For most households it should be fair to say that water is on the list of something we need. If the water company were to increase the cost of the water bill by a hundred dollars people would still feel inclined to buying the services.
The price would have to rise to an ultimate high, which in some cases is relative. Even then some people would still feel obligated to purchase the services, but for most this would cause them to discontinue their services. Another example would be Cigarettes. Although one may not look at cigarettes as an inelastic good, it very much so is. If cigarette tax were to increase demand will be inelastic because many smokers are addicted to smoking and do not have any alternatives to keep buying. Therefore, a change in price causes a smaller change in demand.
The degree to which a demand or supply curve reacts to a change in the price is better known as the curve’s elasticity. Elasticity is one of those things that varies among products because some products may be more indispensable or essential to the consumer. Products that are considered to be a necessity are more insensitive to price. No matter how much the price fluctuates people are still prone to buying these products despite a high increase in price.
The way this course of economics has made me a stronger, candidate to enter the business world is by the knowledge that I have learned from this course. It has taught me a lot of different key concepts as well as topics. Furthermore, this course has affected me as a student and as a person as well as encouraged me on my academic path. The subjects that were covered in this course as well as different assignments made it challenging and at times fun to learn and get a better understanding of the course. This course was at times difficult but pushed me to a new level that was satisfying. I have become more appreciative and have a better understanding of economics.
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