What role does economics play in my personal and organizations decision making?

Teresa: What role does economics play in my personal and organizations decision making?
In my ECO/212 class, our question for the day is what role does economics play in my personal and organizations decisions? Provide an example of the role of economics in decision making.

Answers and Views:

Answer by TheAnswerMan
Perhaps you will consider the opportunity cost of spending your money on one product verses another or another. You might decide whether you want to call in sick or not. If you don’t go to work, you will not make money, but you will have free time. Should you spend one hour watching TV, two, three, etc. or does your marginal utility go down after only thirty minutes? You might decide whether you want to buy premium gas or regular gas at the gas station. Perhaps you consider the marginal benefit vs. the marginal cost of calling up someone on the phone versus emailing them, versus doing neither. Just make up a scenario and run with it. Economics is the study of decisions that people make every day without ever having to know anything about economics.

Answer by msoexpert
Well assuming it’s a microeconomics class and not a macro class, there are a ton of examples. On the first day in my classes, I will give students lots of examples of how the concepts we’ll be covering are related to them and important in the working world.

For example, there’s opportunity costs. It’s an economic concept that also comes into play in accounting, finance, marketing, and management. Why? Because decisions have consequences. And that’s what opportunity cost is all about! In other words, every time a decision is made, there are benefits and there are “costs,” meaning sacrifices. In other words, pros and cons. Opportunity cost tells you what those cons are. And how much they’ll cost you.

So if you were to decide to take an extra class, one opportunity cost would be how much free time you’ll lose as a result. In other words, instead of being in that class, you could be out and about enjoying yourself by shopping, sleeping, being with friends and family, etc.

And if you’re a working student, then an opportunity cost of your taking that extra class may be you’re missing out on making overtime. Why? Because you’ll be in school and devoting more time to your classes. And that’ll leave you with less time to spend working and making money.

This is just one example using an economic concept that comes up very early on, maybe even day one in an introductory micro class. And fyi, anybody who’s learned about the time value of money or the risk-reward tradeoff has really learned about opportunity cost. Time value of money and the risk-reward tradeoff are two economic concepts that have been adopted for use in accounting and finance. Two other classes I’ve taught over the years. And ones where I have schooling or a degre in.

This is exactly why having a background in econ, even an introductory one, is something that’s beneficial to you. And that applies to your personal life, work and careers, and schooling in other subjects. Econ is a very broad-based subject that has uses in practically everything.