Apart from being extremely useful in the business and commercial sectors, the study of economics also offers valuable knowledge for making decisions in everyday life. It provides us with many tools that allow us to approach questions about the desirability of a certain financial investment opportunity, the costs and benefits of alternative careers, whether or not to attend graduate school or college, and the impacts of public policies such as a higher minimum wage and universal healthcare.
Following are some real-world applications of economics:
When you buy something from your local store, you might end up paying a little extra for it when you check out. This is because governments collect money from citizens by imposing taxes on a wide range of activities such as buying goods, owning property, earning income, etc. The government uses tax money to pay for public goods such as national defense, public schools, sewer systems, and roads. Taxes apply to many things involving money. This is a part of economics that we cannot really escape.
We tend to buy goods that offer the highest satisfaction for the price. This is a common sense, however in economics, it is known as marginal utility theory. The primary idea is that a rational person will always evaluate the goods or services and see their utility as compared to their price. The marginal utility theory guides us about the scarcity of resources as well as the alternative use of them. All in all, the knowledge that you gain studying economics directs you to make the right decisions by analyzing all the available possibilities.
We all want to invest for higher and better returns in future. Some of them may generate profit while some may result in the loss. However, you can reduce the chances of huge loss if you evaluate the risks involved in all the available options. Thanks to economics, you have this knowledge of evaluation. With the help of your knowledge in economics, you are able to analyze the various options whether you want to lend your money to someone on a high-interest rate, invest in a fixed deposit, buy land or gold, etc. and also the risk involved in them.
When you gain less satisfaction by consuming a product as opposed to the amount or energy you spent on it, it is known as the diminishing returns. Similarly, while purchasing something, you examine the utility derived from it with each unit and the amount you are paying for it. The benefits are higher as compared to the value in the beginning, but they tend to gradually decrease as you continue to consume it. This law of economics is very useful in our everyday lives.
Forecast and Planning
Although no one can predict the exact future, the study of economics allows you to anticipate the possibilities and prepare for them. Economists can speculate the inflation/deflation a country may face in the future and can plan the finances accordingly. Furthermore, economics also guides you to speculate the stock market and the uncertainty involved.
In conclusion, these are some of the most common real-world applications of economics. There are many others. If you live in Singapore and are struggling to learn or master the subject, then it is highly recommended that you clear your concepts with the help of JC Economics Tuition in Singapore. They offer the Best IB and A Level Econs Tuition in Singapore.