Most common questions used to investigate
Are you aware of the five concepts of economics?
Do you know what demand and supply is?
Are you aware of the economic concept of scarcity?
Do you know what an opportunity cost is?
Are you aware of the time value of money?
Have you studied the fice economic concepts?
Common conclusions
Economics is all around us, so there is no way you can stay away from it, regardless of where you work and what you do for a living. That said, you don't need to know economics in-depth; rather, just a basic understanding should keep you in good stead. Specifically, there are five economic concepts that you must know to live a good quality of life, and these five concepts are supply and demand, scarcity, opportunity cost, time value of money, and purchasing power.
Demand and supply are two complementary concepts in economics. Demand is the need to buy something, and supply is the entity or the industry that fulfills this need. This is the core concept of every activity that we take. For example, let us take the example of going to a grocery store to buy the groceries need for cooking. Let's say you need tomatoes to make dinner, so this need is fulfilled by a farmer who grows them and supplies them to you for a certain cost. This is because the farmer has a demand for money, which is used for something else. So, every action is a simple demand and supply equation.
Scarcity stems from the fact that people have an unlimited need for things, but the resources required to fulfill this need is limited. Let us take the example of tomatoes. Every household requires tomatoes to cook, but the space and resources available to grow tomatoes are highly limited. In this case, only some people will get the tomatoes, and they may even have to pay a higher price to get what they want because of the limited availability. This is the fundamental concept that creates differences between what people have and the price they pay for it.
Opportunity cost is one of the five important economic concepts you must know because you will be using it to make many simple and critical decisions in your life. For example, you will have to decide if you want to make dinner today or order from a nearby restaurant. This is an opportunity cost because you have to evaluate whether the time and effort you put into cooking is more expensive than ordering food from a restaurant. In other words, nothing in life is free, and to help choose what you need, you will have to evaluate what you're willing to give up and the cost for the same.
Time value of money is yet another important concept that helps you make the right investment decisions because it is the basis for the returns you calculate from investments. This is based on the principle that one unit of money today is worth more than the same unit tomorrow.
It is time you quickly understand what they are to make sense of your actions.
You're sure to have a better understanding of the world around you.
References
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