Summary - Essay Example

Summary Economics is an important of study because it deals with the availability of resources and the reasonable and balanced allocation/ supply of these resources to consumers according to their requirement. Resources are products and services which consumers avail to ease day to day lives and to add luxury and satisfaction to life. Since resources are scarce, it is necessary for people to make a choice from the various options available in the market. The study of theories and scientific methods in economics enable a person to foresee the demand and supply of resources using facts.

The application of economics is essential to control the use of resources and conserve the resources from depletion and store it for future use. Consumers are required to forgo the use of certain resources to obtain the advantage of using other resources. Economics is applied to know the consumption and planning behavior of individuals, institutions and governments such as consumption, production and the exchange of goods and service to maintain a logical balance to the available resources (McConnell 2005 p.4-6). The decision made by consumers to forgo or sacrifice a product in order to acquire the next best product is known as the opportunity cost of choice.

A marginal benefit is usually earned while sacrificing a product either in terms of the price of the product or in terms of the satisfaction earned in purchasing an expensive product while making a decision to abstain from buying more products. Opportunity cost proves that a single person cannot use all available resources and it is mandatory to make a choice. The decision made by a person to forgo the purchase of a product in order to buy an expensive product is called trade offs. This usually happens when a person has to purchase within a limited income or budget (McConnell 2005 p.8-9). There is a direct relationship between the independent variable, income and the dependent variable – consumption.

The increase or decrease in income results in a direct change to the consumption pattern; which is an increase or decrease. The graphical representation of a given data clearly explains the direct or positive relationship of these two variables for the given data as in the figure below. The straight upward line will undergo a change if the income decreases because consumption also decreases. The slope is calculated as the ratio of the vertical change to horizontal change between two points in the slope.

It may be summarized that the study of economics enables us to learn the methods and techniques to manage resources and predict probable outcomes based on facts such as the relationship between income and consumption. It is evident from the above consumption income graph that necessary resources can be availed only if there is adequate income. A decrease in income would mean a decrease in the purchase of resources. Therefore, economics is the scientific management of resources based on the affordability of the consumer and the availability of resources and result in a balance of the economy.

Works Cited McConnell, C. R. 2005 Economics: Principles, Problems, Policies, 18e McGraw-Hill: New York