There are many reasons to study economics, including
1.To learn a way of thinking
2.To understand society
3.To understand global affairs
4.To be an informed voter
Economics has three fundamental concepts:
a. Opportunity cost,
b. Marginalism, and
c. Efficient markets.
a. Opportunity cost is the best alternative that we forgo, or give up, when we make a choice or a decision.
b.Marginalism and Sunk Costs: Suppose, for example, that you live in New Delhi and that you are weighing the costs and benefits of visiting your mother in Vashi. If business required that you travel to Mumbai, the cost of visiting mom would be only the additional, or marginal, time and money cost of getting to Vashi from Mumbai.
Example: For an airplane which is about to take off with empty seats, the marginal cost (the cost of producing one more unit of output) of an extra passenger is essentially zero; the total cost of the trip is essentially unchanged by the addition of an extra passenger.
Sunk Costs are costs that cannot be avoided, regardless of what is done in the future, because they have already been incurred.
c.Efficient market is one in which profit opportunities are eliminated almost instantaneously.
Examples: (1) In a queue, say at a toll booth or for clearing a multiple register grocery line, a profit opportunity will exist if one line is shorter than the others. (2) If you get a hot tip on the stock market, you might be skeptical. If the tip is valid, there will be an immediate rush to buy the stock, which will quickly drive its price up.
It is useful to understand society better.
Past and present economic decisions have an enormous influence on the character of life in a society.
E.g. current state of the physical environment, level of material well-being, nature and