Micro Economics- Everyday Applications of Some Concepts
Applying concepts of Microeconomics in Daily Life and Profession’ I would like to put forth a daily life applications of fundamentals of Microeconomics, Demand and Supply and how we take decisions which are economic in nature, given limited resources. As is universally known, resources are scares and limited, like; time and money. Considering the Demand first, it appears we are always making decisions in how to spend time. Now various activities in our life on a daily basis will compete for this limited resource.
With only 24 hours a day there are some activities for which there is predefined amount of time that is to be spent (it’s like a Fixed Cost), say for egg. : freshening up and getting ready for the day, travel time to office and eight and a half hours that I need to clock everyday at office etc. Supposing I spend seventeen hours (8. 5 hours in office, 2 hours in traveling and 1 hour for getting ready and 6 hours sleeping), I am now left with only 6. 5 hours which various other activities will demand and I will have to strike a trade-off.
I may spend these 6. 5 hours in reading some books, talking
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In the way I or any of us spend the earned money is again decision making or trade-off decisions and for sure supply of money (salary in this case) is scares and not unlimited. I recently bought a Flat and made a trade-off decision between purchasing a Flat or purchasing a Car. At that point of time I considered the perceived benefits of investing in a Flat (Tax benefit, investment in real estate which is an Asset and appreciating value of Asset) outnumbered perceived benefits from investment in a Car (Status symbol, Ease of travel and depreciating value of Asset as opposed to appreciating value in case of a Flat).
Similarly, when I enrolled for PEG in a premier institute, I had money to invest in further education but had multiple choices in terms of Institutes. After analyzing various factors I concluded PEG from one of the top 10 institutes is going to reap better benefits as compared to any other institute in terms of enhanced future career prospects, enhanced knowledge because of extensive academic rigor and getting associated with a strong Brand name. The above examples of decisions are not made daily, and therefore we need to look at trade-offs being made more frequently, given the scarcity of money.
When I find time for some leisure at weekends, I for sure choose from among various alternatives to relax and enjoy; go too pub, watch a movie, go for shopping, take a break and icepack to a holiday destination etc. Depending on the perceived returns or benefits and amount of time and money each of these alternatives demand, I make a Micro Economics- Everyday Applications of Some Concepts By parish For sure, the definition of economics states – a field of enquiry about how we as individuals and as a society allocate our limited resources.
Another Microeconomic concept that I have applied in my Profession is of ‘Diminishing Marginal Product’. Diminishing Marginal Product states that the marginal product of an input declines as the quantity of the input increases. I have applied his learning at my workplace as well. We had to assess a large pool of employees to know their potential to grow and take higher responsibilities. In such assessments, Senior Assessors observe participants during different individual as well as group exercises, like; Group Simulation, One-to-One Role Plays etc.
These Senior Assessors spend an entire day in observing earmarked Participants during various exercises and at the end of the day summarize their observations to create individual reports. During one such initiative we wanted to conduct 15 such Batches one batch of 15 Participants and 5 Assessors each) within 1 5 consecutive days. Which effectively meant all Senior Assessors would be engaged for all 1 5 days (without a break).
For keeping the process objective, we wanted to use the same set of Assessors in order to make the whole process of Assessment uniform and hence getting a different set of Assessors after every 2-3 days was ruled out. At the same time we knew if an Assessor is engaged for more than 5 consecutive days, Diminishing Marginal Product (in this case ‘Product’ being quality of Assessment done) would set in. This could result in poor Assessment leading inappropriate decisions.
To avoid this, we gave a break to all the Assessors after every 5 days by introducing just one additional Assessor. The following table explains none of the Assessor was engaged for more than 5 days at a stretch (6th day was break day) and came back on the next day all rejuvenated: Day of Assessment Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 Day 8 Day 9 Day 10 Day 11 Day 12 Day 13 Day 14 Day 15 senior Assessors Above examples are lust of real life applications Microeconomics’ concepts. For sure Economics is lived and practiced by all of us every day.