Ben.rajesh, CC BY-SA 4.0 https://creativecommons.org/licenses/by-sa/4.0, via Wikimedia Commons
I recently took the Microeconomics course on Coursera and found it useful. As part of the course, we were given some practice questions related to applying economics in daily life. In this article, I have listed these practice questions and my answers to the questions.
According to Wikipedia: Economics is the social science that studies how people interact with value; in particular, the production, distribution, and consumption of goods and services. In this article I will discuss some daily life applications of Economics.
According to Wikipedia: Trade involves the transfer of goods or services from one person or entity to another, often in exchange for money.
Many of the concepts we will be discussing this semester should apply to your daily life, including the ones we talked about this module. This discussion question gives you a chance to begin exploring economics in your daily life.
Give at least 2 examples of any of the concepts we introduced this module that you observe in your daily life. Try to be very specific describing the examples, and also describe how the economic principle applies to your examples.
A picture is worth a thousand words. I truly believe this is true. Not only can a picture more easily describe a concept, but the process of finding that picture can also be a good learning experience.
Find 1 picture (photograph) that represents any of the 4 principles we introduced this module. Along with your picture, post a brief description of how this photograph is a good representation of the principle in action.
The outcome of trade is that both parties benefit from it. The picture illustrates this concept.
According to Wikepedia: Opportunity cost is the loss of the benefit that could have been enjoyed if the best alternative choice were chosen instead. Directly or indirectly, opportunity cost underpins the majority of day-to-day economic decisions that are made in society.
Please list the 2 largest opportunity costs of obtaining a 4-year degree (assume you must go to college full time to get this degree). Now, use 1 of these costs to explain the following trend: When the unemployment rate increases, enrollment in college also increases, and vice-versa.
When the unemployment rate increases, fewer people are working and more are spending time at home with their families. When people are forced to stay at home with family, they start getting used to being at home and are more willing to go out and explore new opportunities such as going to college.
When enrollment in colleges increases, a lot of people spend a lot of time behind books and in class rooms. In a sense, they become isolated from the rest of society and are not able to participate in activities that add value to society. If value is not being added, then there are fewer opportunities for people, which may result in an increase in the unemployment rate.
When the unemployment rate increases, people are not encouraged to spend on non essential products and services. This may encourage them to spend on college.
When enrollment in college increases, people spend a lot on college tuition, so there is less money for other resources. Because there is not enough money, there are less opportunities for people to work, which can lead to an increase in unemployment.
According to Wikipedia: The Invisible Hand is an economic concept that describes the unintended greater social benefits and public good brought about by individuals acting in their own self-interests.
One of the principles we introduced this module is the invisible hand principle: society generates the most welfare when individuals try to maximize their individual interests. As many economists point out, this principle requires good societal institutions in order to work. When institutions do not work correctly, what we have is sort of an invisible foot. So here is the question:
Please describe a situation in which the invisible hand does not seem to work. Then explain why the principle does not work and what would need to happen for it to work.
It is common for people to want to increase the amount of money they have in the bank. But if there are no opportunities for spending this money, then it becomes useless. It may even become a burden on society, since interest in payed on the money in the bank account. In many cases, the money in the account holders bank account increases automatically, without the knowledge or explicit consent of the account holder.
The individual may think that his interest is being served, but society as a whole will probably not benefit, because simply transferring money to a users account, without the knowledge or consent of the account holder will not create any value. So it would seem that the invisible hand principle does not work in this case.
To make it work in this case, the banking institutions should transfer money to and from an account after investigating the activities of the account holders. One way to achieve this is to allow the banking transactions to take place, but only finalize the transaction after the activities that led to the transaction have been investigated. The banking institutions should collaborate with other social institutions in this regard.
Another option is to create specialized accounts that serve the needs of different types of account holders. It would be also useful if the banking institutions engage with their customers on a personal level and try to find spending opportunities for their customers. In this way the customers will be happy and society as a whole will benefit because of creation of value, that should result from the customers spending.
One of the questions we discussed this module was what would be the best way to teach a Coursera course. Since my time is a limited resource, and since there are more than one way of distributing this limited resource, this is a classic example of the economic problem. In our lecture we listed the following three possible distribution schemes:
Choose which 1 of the 3 distribution schemes that you think is the best. Then, clearly discuss why you think this is the best way to distribute the limited resource. In your answer, please also discuss the pros and cons of the 3 distributions schemes.
Many education researchers are discovering the benefits of studying in groups. Yet for an economist, this should have been obvious…or is it?
Explain the economic benefits of studying in a group versus individually. Please try to offer a specific example to demonstrate your arguments. For instance, would it be better for you to study with another person for the first exam of this class? If so, how many students would be a good number of group partners? Why might the benefits of adding more partners to the group decrease as more partners are added the group?
The main benefit of studying in a group is that it allows people to share their different views and opinions on a topic. This should improve the students understanding of the topic. I think before studying in a group, the students should first go over the course material individually. Three or four would be a good number of group partners. I think that if more group members are added, students become more distracted since there is a large number of other group members they need to think about. Also students may get over-whelmed if they need to consider too many points of view on a topic.