The Economic Way of Thinking Essay Example | Topics and Well Written Essays - 1000 words

The Economic Way of Thinking - Essay Example This paper outlines the growing importance of applying economic way of thinking in today`s world. Thinking economically provides a perspective on social transactions and human decisions. It can be summarized as the perspective that egresses from the supposition that all kinds of social processes consequence from interactions amongst the selections made by individuals after estimating the anticipated costs and benefits their choices inherent. Economics maintains that individuals make selections on the basis of their perceptions of what could be beneficial to them. The instruments of economic thinking assist individuals in understanding what determines the perceptions of alternatives faced by individuals. Economics relates with human actions, the way they respond to situations and the way the actions of different individuals are aligned in society. Economic thinking is ubiquitously suitable and always practicable; it can be employed by any culture or age group, in any context or situation. The perceptivity it furnishes is powerful and can assist even very juvenile students add up of the sometimes bewildering world. The instruments of economic thinking assist individuals in understanding what determines the perceptions of alternatives faced by individuals The centrality of apprehending human behavior resides in discovering incentives. There are a number of principles that can be considered as fundamental to economic thinking and can help in understanding the way humans behave, public policy matters and markets. Moreover, prices and markets coordinate with each other in influencing the human behavior. Discussion Thinking economically provides a perspective on social transactions and human decisions. It can be summarized as the perspective that egresses from the supposition that all kinds of social processes consequence from interactions amongst the selections made by individuals after estimating the anticipated costs and benefits their choices inherent. This view is particularly useful when applied to explain the functioning of predominately neutral network of dealings that are referred as simply economy or the market system. Economics basically deals with the reality of scarcity that makes individuals to pick amongst various alternatives since there is a competition over scarce resources amongst individuals as the services and goods are desired in much greater quantity than they are available in the nature (Slesinger, Gilbertie & Tarullo, 1993). Being human, people desire for services and g oods is virtually limitless. But this unlimited desire cannot be furnished, due to the presence of constraints that restricts our ability to fulfill our wants. Scarcity is said to be there whenever the resource or good desired is available in lesser amounts in nature than the amounts required or desired by people. However, there exist few resources that are not scarce like sea water as it is less required than its availability but everything else is less than what is required by people even the time is scarce too. Economically a good may be considered as scarce even if it has been produced in greater quantities as long as it is not provided by nature in quantities required by all individuals. Such as automobiles and apples that can be seen in abundance in United States but still they are scarce because we’ll need more than what has been provided by the nature (Giesbrecht & Clayton, 1997). This concept of scarcity makes people to choose amongst the options provided such as a s tudent may consider deciding between studying for an hour and watching a movie for the utilization of his time. And these choices are the outcome of the scarcity. These choices can be based on intuition but economics calls for rationality. Rationality requires that while deciding the associated benefits and costs of a decision should be compared and whenever a choice is made, it consequences from the