How Economics is Related to My Life

“There is no such thing as a free lunch.” When someone offers me free lunch, I now understand that the lunch may not cost me any money but that someone else produced the ingredients, transported them to the store, and paid for them. Economics is the study of how goods and services are produced, distributed and utilized. In The Wealth of Nations, Adam Smith wrote that the sole motivator of man is self-interest. My self-interest is active when I buy shoes, develop my talents, and participate in our economy.

Last week I bought a pair of shoes at the Short Hills Mall. The production, distribution, and sale of shoes are a prime example of division of labor. Companies manufacture these shoes. These companies utilize the division of labor. In these companies, there is a specific job for a person or a group of people. The division of labor is defined as the separation of a work process into a number of tasks, with each task performed by a separate person or group of people. It is most often applied to systems of mass production and is one of the basic organizing principles of the assembly line. Splitting up work into simple, repetitive tasks eliminate unnecessary motion and limit the handling of different tools and parts. This is related to the example above; where the production, distribution, and sale of shoes are separate tasks in the separation of a work process. Another example of division of labor is: two people are assigned to wash the dishes. One person has their own task for themselves. One person washes the dishes while the other person dries them. As you can see, these two people have their own task that they were assigned to, just as companies. One last example of scarcity is: if we all grow our own wheat, and then al...

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...f alternatives of how to spend my Friday night: I can go to the movies, I can stay home and watch ‘The Big Bang Theory” on TV, or go out for hot chocolate with friends. If I choose to go to the movies, my opportunity cost of that action is what I would have chose if I had not gone to the movies - either watching the “The Big Bang Theory” or going out for hot chocolate with friends. As you can see, the concept of opportunity cost is a part of our every-day life.

Economics is related to everyone’s life. It is (as said before) the study of how goods and services are produced, distributed and utilized. We are making economic choices every single day in our every-day life; we just might not realize it. In this essay, I explained to you how these economic concepts, opportunity cost and scarcity, are related to our every-day life.

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