Applied Economics to Real World Experience

Applied Economics to Real World Experience

When first approached to define economics, I would typically state, “Economics is basically going to the store and buying what I want or need.” Obviously this is an extremely shallow view of the correct definition of economics. “The definition of economics, which is the social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity” (McConnell, Brue, & Flynn, 2009, p. 4). An in-depth analysis of the concepts that constitute economics offers unique views into how the world conducts business.

Many of this week’s concepts found in our assigned readings can be easily applied to not only my professional life but to my personal life as well. Concepts such as a product’s price elasticity of demand has influenced my tendency to make purchases of products which I felt were overpriced. However, as my income has increased, what I am willing to pay for elastic products has become less reserved. “The primary determinants include the price of a product, the household's income, the household's accumulated wealth, the prices of related products, the household members' tastes and preferences, and their expectations about the future” (University of Phoenix/ Pearson, 2010, Ch. 1 Lecture Notes). With lesser means to shop, I would purchase only the cheapest meats from bulk stores, but now my wife and I have an income allowing us to select finer cuts of meats.

In a local grocery store the other day with my family, I caught myself analyzing various products on the shelves to classify how income elasticity of demand would place each item. Normal or superior, substitutes, inferior, and complementary goods classify products based on a consumer’s response and willingness to make the purchase. I found it very interesting to look into people’s shopping carts and see the different types of food. Understanding the classification of elastic and inelastic products and what...