It is important to learn economics because many of us don’t realize that the things happening around us are part of economics. Some of the simple things that go on in our daily lives are just things like; The Principles of Economics, Supply and Demand, or Market Efficiency. With economics we learn to put a name and a deeper meaning to these things. I will explain these things as well as my experiences with them in this paper. Principles of Economics
The Principles of Economics are a list of ten Principles based on how people make decisions. There are a few that are really close to home. The first one I see the most in my life is “People respond to incentives” (Mankiw, 2007). Behaviors change when the cost or the benefit changes. For example the benefit to getting a job and working all of your scheduled hours is getting a paycheck, which is an incentive. You respond to this incentive by working harder to continue getting your paycheck, getting a possible raise, and even chances to move up in the company. Another example is the cost of drunk driving is getting a fine, losing your license and possibly getting time in jail, which is not really an incentive but more of a consequence, which still works the same way by changing your behavior. These consequences will make you not want to drive drunk.
The next principle that I see a lot in my life is “People Face Trade-Off’s” (Mankiw, 2007). To get one thing, you have to give up something else. Making decisions requires trading off one goal against another. A lot of times I need to make trade-offs in time to do my school work. I used to spend a lot of time with friends and going out having fun, but I made a “trade-off” that was my choice, to spend more of my time on school than doing other things. It’s a choice I had to make but it pays off in good grades and more knowledge. Another Trade-off I see people making is time for money. I will gladly trade a few...
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