Importance of economics in our daily life

What is the importance of academic subjects in everyday life? This is a question often asked but seldom answered to satisfaction. School subjects are necessary to impart knowledge to children. It helps them to know more about life, the environment, nature, wildlife, culture, and various other vast arenas of topics. Amidst all, the subject, Economics is one interesting subject that we are taught while in school and college. Today’s blog talks about, what is the importance of Economics in our daily life.

What is Economics?

Economics, being a social science, uses empirical evidence and scientific methods to study people and the choices they make. In particular, it studies how agents such as businesses and consumers make strategic decisions and respond to incentives. It analyzes how individuals or societies can efficiently allocate their resources, such as time, money, personal health, human capital, food, or the earth itself, in order to achieve a higher standard of living. When many people think of economics, they think of money, finance, or business; however, this is not exactly what is studied. The tools learned in economics can help individuals spend money more efficiently or make sensible business decisions, but this is only one of many applications of the discipline. Economics provides the insights and analytical framework required to understand the way our world operates from the choices we make in our everyday lives to how businesses or governments achieve their desired objectives.

Why Study Economics?

Understanding economics will make you a better thinker and problem solver. The concepts learned will help explain your own behaviours when it comes to allocating your time, money and other resources, and will help you make intelligent and rational decisions. Without a good understanding of economics, people may unintentionally make irrational decisions. For example, people tend to buy things when they go on sale, even if they wouldn’t normally buy that item, even at the sale price. Economics helps correct these fallacies by teaching sound decision-making. Additionally, it will allow you to better understand the world around you, including how businesses and governments operate.

We use economics in our everyday lives.

Every day, people make choices that affect their lives, in big or small ways. When making a decision, people tend to choose the option that makes the best use of their resources in order to achieve the best possible outcome. That is what economics is all about. You are employing economics when you ask questions such as:

• Should I do homework tonight or watch a movie?
• Should I make coffee at home or buy it at a coffee shop?
• Should I go to university right after high school or get a job?
• Should I drive to work or take the bus?

Every decision made utilizes economic methods by analyzing the costs and benefits of each option or pros and cons. A rational person will choose the option that yields the highest net benefit for themselves. Clearly, economics is everywhere; it helps us make logical decisions and achieve outcomes that make us, as individuals or as a society, better off.

How to apply Economics in daily life?

The importance of economics to our daily life activities varies, although some of the actions which are taken can be said to be common sense economics gives a better understanding of how all these things work. Below are explained some ways in which economics can be applied.

Economics helps to understand that buying or paying for goods that can give you maximum satisfaction is better than paying for goods that you would not enjoy. This is common sense but as an economist, you have a better understanding. Economics also helps us to understand diminishing returns. This is said to be when the level of profits gained is less than the invested money. Diminishing returns can set in at any point in time for any business or organization. Let’s take, for example, if you buy a piece of cake in three different portions, you eat the first portion and get the satisfaction you want when you eat the second portion, the satisfaction reduces and likewise on the third round. This literally explains that the money you use to purchase the cakes compared with the level of satisfaction you got is unequal. This also happens in business too. Economics helps to understand the market: economics helps to understand the market trend, how to fix market failures and also how to understand customer behaviour. For instance, as a business owner and you produce goods which are taken to the market for sale, economics would help you to understand how your consumers receive the goods and how they are responding to its sales.

The importance of economics: to students are The importance of economics to students varies. Here is the importance of economics to students;

• communication – presenting ideas in a well-defined framework supported by evidence that uses complex data

• numeracy – handling complex data and techniques of mathematical and statistical analysis

• problem-solving –Economics teaches the students the skill of problem-solving

• analytical skills – Analytical skills, are quite necessary for students in today’s time and Economics helps students develop their analytical skills as they analyze various data.

The importance of economics to society cannot be overemphasized because it is a way of life. This article has shown how we apply economics in our daily lives. As a student aspiring to study economics, there are different areas of specialization which you can focus on as a graduate, in all you should be ready to apply them to your daily living. At,

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About SFS School, Guwahati

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Teacher and content writer at St. Fransic De Sales School. https://sfsguwahati.ac.in/