Microeconomics Essay: Economics Concepts as an Integral Way of Life

This essay explores the argument that "economics is the way of life" by examining core economic concepts such as demand, supply, price elasticity, and opportunity cost. It explains how demand and supply interact to determine prices, influenced by factors like income and substitute products. Price elasticity is defined as the measure of changes in quantity demanded relative to price changes, categorized as elastic or inelastic. Opportunity cost is described as the value of the next best alternative foregone when making a choice, highlighting the trade-offs inherent in resource allocation. The essay also addresses the fundamental economic problem of how to best utilize scarce resources to meet unlimited wants and needs, emphasizing the importance of deciding what and how much to produce. It concludes that these economic terms and principles are not just academic concepts but are integral to everyday decision-making and societal functioning. Desklib provides similar solved assignments and study resources for students.

Running head: MICROECONOMICS
Microeconomics
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1MICROECONOMICS
Economics is the study that depicts the way in which the society manages the scarce
resources. Economics is everywhere and used in daily life even in managing the household
resources. Demand and supply under economics is the relationship among the quantity of
commodity that is preferred by the seller to sell and the quantity preferred by the buyer to
bye. This is the main theory behind price determination used under economic theory.
Demand of the product depends mainly on the price and various other factors like household
income, seasonal effects and availability of substitute products. On the other hand, supply is
mainly depend on the price of the product the customers are ready to pay for and various
other factors like production technique, cost of the labour and price of substitute products
(Rios, McConnell & Brue, 2013).
Price elasticity for demand is the measure that is used to measure the changes in
quantity purchased or demanded as against the changes is prices for that product. In
mathematical term – price elasticity for demand = % changes for quantity demanded / %
changes for price. If there is big change in the product demand owing to the changes in price
demand will be termed as elastic as there is wide change. On the contrary, if the change is
small owing to the change in price demand will be termed as inelastic (Gordon, Goldfarb &
Li, 2013).
Opportunity cost in economics is referred as the relationship among choice and
scarcity. As the resources are limited whenever a choice is made to use them other options
are chosen to be foregone. Economists use the expression opportunity cost for indicating
what shall be given up for obtaining something else that is desired. The basic principle is that
each choice has particular opportunity cost. Therefore, opportunity cost is value of next best
available alternative (Chodorow-Reich & Karabarbounis, 2016).
The major economic problem is how to use the scarce or limited resources in best
way. The problem related to economics exists everywhere as the demands and needs of the
people are unlimited whereas the available resources are limited to satisfy their demands and
needs. Another problem is that to decide regarding which product is to produced and the
quantities of that product to be produced. This is associated with distribution of limited
resources as compared to total output composition of economy (Platteau, 2015).
Hence, various terms like demand, supply, opportunity cost and price elasticity are
used in daily life and considered as the way of life.

2MICROECONOMICS
Reference
Chodorow-Reich, G., & Karabarbounis, L. (2016). The cyclicality of the opportunity cost of
employment. Journal of Political Economy, 124(6), 1563-1618.
Gordon, B. R., Goldfarb, A., & Li, Y. (2013). Does price elasticity vary with economic
growth? A cross-category analysis. Journal of Marketing Research, 50(1), 4-23.
Platteau, J. P. (2015). Institutions, social norms and economic development. Routledge.
Rios, M. C., McConnell, C. R., & Brue, S. L. (2013). Economics: Principles, problems, and
policies. McGraw-Hill.