Essay on Economics Concepts and World Reality

The economics fiction and the economic terms are very significant in the real world. They are important since they are used to predict the future and thus act as the major influences on people's decision. It is known that people make decisions based on their economic status and the general look of the country's economy. Decision making with the economics concepts are at hand is crucial as it allows an individual desist from the issue overspending. Furthermore, it is also important because it avoids the situation of impulse buying by enabling an individual buy only the goods that he or she has budgeted for.

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The real essential versions, products, and services such as phones have to be obtained by considering their importance to our lives. For example, before a phone can be a purchase, it is important to consider the marginal decision making and the marginal benefit that the phone will be bringing to the person. It is also of great significance to take into consideration the availability of resources such as the finances that will be used to purchase them. If the person has the disposable income and has budgeted to buy such a phone, it would be worth purchasing it. Furthermore, it is also of great significance to consider the opportunity cost of buying the phone over purchasing other items such as the clothes and food. It would be wrong if an individual purchases the phone at the expense of food and clothing.

When purchasing feeds for my cows, it is also important to ensure that the factors that determine the decision are adhered considered. I would be able to consider the economic resources such as labor, land, entrepreneurial skills and also the capital. Since I do not have these resources, it would be imperative to purchase them from someone who has these resources and can produce them cheaply. Scarcity and preferences can also come in during the purchase process. It would be advisable to buy the feeds when they are in plenty rather than waiting for the period of scarcity to engage in the acquisition. Purchasing during the time of plenty is crucial in that it allows for saving of the penny that would otherwise be used during the scarcity period.

Equilibrium in economics is the concept that means when one is at equilibrium; there are no forces that will eventually move from the equilibrium point. In the market, the concept is achieved by putting together the supply and demand where the prices meet; then the balance is said to have been achieved as indicated by the figure below

Therefore, when trying to start such as a shop, it is important to set the prices of goods and services being sold at the point where the demand and supply meet. This is significant since it enables the customers to purchase products from the shop rather than going to purchase them from other entities.

The non-price demand will enable me to compare the prices of goods and services without using the concept of pricing. It involves getting to understand that the price and supply are priced based on the quantity supplied, and quantity demanded as explained by the graph below.

In the current world also, the companies are competing by the economic concepts that will provide good opportunity to compete favorably in the market. Many organizations take an opportunity of the comparative advantage to produce goods and services that would eventually gain higher market than those which it is competing with. For instance, a company like Microsoft have the comparative advantage of producing and selling software products, unlike Coca-Cola whose comparative advantage is to produce soft drinks that will gain market fast due to its low prices. Microsoft has high number skilled and unskilled workers who have extensive knowledge for the production of superior software. The cheap labor is important because it will enable the company to make software that is comparatively cheap than those produce by other businesses. Therefore, in such enterprises, they have the opportunity of specializing in the production of the goods which they are well vast with and have the resources of producing such goods and services.

The cross-elasticity of demand is important in the current world since it explains the significant relationship between the goods and services. Ideally, it establishes the responsiveness of the goods that are demanded and those goods change in prices. It is important to consider the concept especially when going to buy products that complement each other for instance if I am going to purchase lotions, I would consider the cross-elasticity of products such Nivea and Valona products. I would buy the one that has the positive elasticity of demand.

Income elasticity of demand explains the change responsive change of a person's purchase of goods and services when his or her income changes. When an individual gets a higher income, he or she tends to purchase the products that are luxurious. For example, if my income increases I would purchase a luxurious car leaving and improve my lifestyle. However, goods and services such as normal and inferior goods would remain the same. I cannot increase the amount of salt in my house if my income is increased.