Reflective Essay
I was asked to write an reflective essay for my portfolio for the subject 'principle of economics'. My favourite topic for economics will be economics principle that is under topic 1. I found it the most interesting compared to other topics because it teaches us what people get and lost when making a decision. There are 4 economic principles that is trade-off, opportunity cost, response to incentives and marginal cost and benefits. In trade-off principles, one has to give up another option to get what one wants. While opportunity cost is the option that one gives up, this sometimes makes people don't know which option to choose between the two options because we can't choose two option at once. Response to incentives is meant how people change their decisions that they made when something or someone that means a lot to them were added into the options. Lastly, marginal cost and benefits meant that doing more on the same action will gives you the same benefits. The most useful topic that is useful and applicable to our everyday life will be the economics principles too because it teaches us to think carefully before choosing an option and choosing the same option won't benefits us as time goes by. I think that we should learn more about this subject as it teaches us many things that we use in our daily life and we aren't aware of it, besides that is teaches us how economies work in a country or even household.
I was asked to write an reflective essay for my portfolio for the subject 'principle of economics'. My favourite topic for economics will be economics principle that is under topic 1. I found it the most interesting compared to other topics because it teaches us what people get and lost when making a decision. There are 4 economic principles that is trade-off, opportunity cost, response to incentives and marginal cost and benefits. In trade-off principles, one has to give up another option to get what one wants. While opportunity cost is the option that one gives up, this sometimes makes people don't know which option to choose between the two options because we can't choose two option at once. Response to incentives is meant how people change their decisions that they made when something or someone that means a lot to them were added into the options. Lastly, marginal cost and benefits meant that doing more on the same action will gives you the same benefits. The most useful topic that is useful and applicable to our everyday life will be the economics principles too because it teaches us to think carefully before choosing an option and choosing the same option won't benefits us as time goes by. I think that we should learn more about this subject as it teaches us many things that we use in our daily life and we aren't aware of it, besides that is teaches us how economies work in a country or even household.
2 of the exercise given :
Exercise Topic 1
1. What
is the definition of Economics?
The
definition of economics is a study of how individual and economies make
decisions about the use and allocation of their scarce resources.
2. What
is the meaning of scarce resource? Provide
3 examples of scarce resource (other than time & money).
Scarce
resource is a resource that has limits. The examples are oil, energy and water.
3. Why
is the management of scarce resource important?
So
that scarce resource can be used wisely and won’t be wasted by inappropriate
management.
4. Identify
and explain the 2 types of economics. Can you give one example for each
type of economics?
Microeconomics
and Macroeconomics. Microeconomics is the study of how individual households and businesses function or behave. Example:
How much oil u used up for a day. Macroeconomics is the workings of an economy
(national, regional) as a whole. Example: Does the amount of money Malaysia owe
other country increase or decrease?
5. What
are the 2 methods of studying economics? What does each method involve?
The
methods are positive economics and normative economics. Positive economics attempts
to understand how economic systems work or behave without making judgements while normative economics attempts to find out if an economic outcome or behaviour is good or bad, and whether they can be
made better.
6. What
is an opportunity cost?
An
opportunity cost is the second best choice that you give up when making a
decision.
7. For
each of the following situations, describe the potential opportunity cost(s):
·
Studying for your economic test
Lesser time to hang out
with your friends.
·
Driving to Sunway Pyramid to buy a Wii
Console and games
Lesser time to study .
·
Buying a new car instead of taking the
bus to work/study
Save fuel cost.
·
A company spending an extra $10
million dollar for research
Less 10 million to
invest in other field.
·
Asking girl/guy A out for a date.
Enable to ask girl or
boy B out for a date.
8. Draw
a Production Possibility Frontier (PPF) graph with the Y-axis for product A,
and X-axis for Product B. Designate 2 points (C & D) on the curve.
a. What
are the different quantities of product A and B produced at point C and D? What
principle does point C and D illustrate?
b. Please
designate a point (E) to show resources being used inefficiently. Give 2 examples how this inefficiency can
occur.
c. Designate
one more point (F) outside of the curve. What does this mean? How can a firm’s
PPF grow to that point? Give 2 examples.
d. Draw
a new PPF graph for a growing firm (over the years).
9. One
of the economic principles states that “People respond to incentives.” Explain
this principle and provide a relevant example.
The
principle that states “people respond to incentives” means that the opportunity
cost has changed and it will motivate you to change the decisions u made.
Example: You've decided to go for a party and you sacrificed your time for the
party and failed to finish your homework, until you know that the marks for the
homework u failed to finish will be add-on to the finals. So, you changed your
mind and decide to miss the party and finish your work.
10. Explain
what a free market (or capitalistic economy) means? Planned economy? What about
a mixed economy?
A
free market is a market system that people have the freedom to set-up, grow,
sell or shut down their business. A planned economy is system that the
government decides what to produce and sell. It controls all the factors of
production. A mixed economy is a system that combines free market and planned
economy. People have the freedom to set-up, grow, sell or shut down their
business but controlled by government to whom you are doing business with.
Exercise topic 2
1.
The
demand equation for strawberries in the Eden Village
2.
Explain
the law of demand.
Law of demand states
that as the price of a product increases, the quantity demanded will become
lower, and vice versa.
3.
What
is the difference between an individual demand curve and a market demand curve?
The difference is that individual demand curve is only for an individual while market demand curve is the demand for the whole market.
4.
When
you draw a simple downward-sloping demand curve, what assumptions are you
making about the other factors (e.g. income of buyers, product popularity,
etc.) that can affect demand?
Income of buyers will affect the demand curve because if the income of buyers are lower the lesser the product they will buy and this will affect the curve. If the product popularity is low the buyers will not buy the product and this affect the demand curve.
5.
A
higher price for the product induces a lower demand. Why is this so? Explain.
When a price of a product is high, buyers will choose to buy other product that has a lower price this induces a lower demand.
6.
For
each of the situation below, identify the factors at play and draw the graph
showing their effects on the demand curve of microwave meals:
a)
Microwave meals become less fashionable.
b) The
price of its substitute (say, fast food) increases.
c)
Income falls and microwave meals is an inferior good
d)
Consumer believe that the price of microwave meals are going to increase in the
near future
e) The
price of its complementary products (e.g. ketchup, salt, pepper) decreases.
7.
Explain
the effect of number of buyer on the demand of a product.
The more the number of buyer the higher the demand of the product because everyone will be competing to get the product and this increase the demand of the product.
8.
What
do you call goods whose quantity demanded rises when income increase and vice
versa? Can you give 2 examples?
Those are called normal goods examples are branded fashion and cars.
9.
What
are complementary goods? What happens to the demand of a product when its
complementary good experience a price hike? Why? Can you give an example of
complementary goods?
Complementary goods are goods that need to use with another product. The demand of a product will decrease when its complementary good experience a price hike because if they want to use the product they need to buy its complementary goods that its expensive. Example of a complementary goods are guns and bullets.
10. What are substitute goods? What is the
relationship between the demand of a product and the price of its substitute?
Why? Provide 1 example of substitute goods.
Substitute goods are goods that can replace one another. The higher the demand of a product will be if the price of its substitute goods are higher then itself because people will choose to buy the cheaper good. An example of substitute good is beef and chicken.
11. Can you think of a product whose demand goes up as its price increases? Explain why does the law of demand does not apply to this product.
Products like antics whose demand goes up as its price increases. Because antics are limited and there are no production of it.
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