How Economics Solves Real-World Problems

How Economics Solves Real-World Problems

It’s 12am. The party is far from over. Your friends are just about to leave. And you’re just down to last three pieces of the cake. How do you slice it up among your five close friends? If you’re familiar with game theory, you may think of the classic strategy where each of your friends cuts up a slice and leave the rest for the others. But would that solve the problem of who gets the first turn?

Game Theory

Game theory, which is also known as the science of strategic thinking and can be learnt in university-level economics tuition Singapore provided by a qualified economics tutor, is the archetype theory when solving such problems, taking into account human behaviors and tendencies. In the past century, it has served as a popular domain of Noble Prize-winning economists. Though the notion assumes that players act rationally, maximizing their returns, that is not always the case in real life. Who wouldn’t want more cake in their share? If studying economics can explain teenage life, then perhaps it even has relevance examining trends and extracting useful conclusions regarding wider world issues.

How Economics Helps Us In Our Everyday Lives

Every society, at every level, faces making choices. Each day we come across a myriad of situations – what shall I have for breakfast, scrambled eggs, or cereal? Shall I add another semester to my education – how will that affect my prospects? A teenager chooses between getting the most-recent gadget available this summer and saving up to get the next iOS update when it arrives. Families choose between spending on buying a new house now and saving up for the future. Cities have to decide whether they should allocate resources towards improving the school system or allocate more budget towards upgrading infrastructure (e.g. roads). Governments choose between devoting more funds to national defense and increasing healthcare budget.

Economics attempts to explain how our individual actions on a microeconomic level contribute to greater economic trends. So why do we have to choose between resources? The answer is simple. Economic resources are limited in supply. We do not have enough resources at our disposal to fulfill our infinite demand for goods and services. Let’s say, you have $5 (limited resources) that you can choose to spend on either ice-cream or crisps (unlimited wants). You are forced to make a choice since you can’t afford both. This ‘trade-off’ is formalized by the concept of Opportunity Cost. That is, if you are choosing ice-cream you are giving up your ability to consume crisps. Every choice involves opportunity cost – the value of the next best alternative forgone.

The same applies to the larger world at a macroeconomic level. We have been helping our students master the fundamental concepts through economics tuition Singapore with our lead economics tutor, Mr. Anthony Fok. Mr. Anthony Fok has been a private economics tutor for over five years. Covering microeconomic and macroeconomic theories and concepts, as well as effectively answering data response questions supplemented by examination techniques. Economics makes the world go-round whether you choose to believe it or not. For example, here’s an economic solution to climate change that could save trillions.

Economics Is A Super Diverse Discipline

Virtually every major problem that the world is facing today — from hunger to excessive poverty, climate change and global warming, to conflicts in the Middle East — has somewhat a huge economic implication on our economy. Hence, Economics is crucial. Frank Stilwell, a notable Australian political economist, defines the entire framework of an economy as the means whereby goods and services are produced, exchanged, and distributed among the members of society. Incomes and wealth are generated through these processes of production, exchange, and distribution. Economics, writes Stilwell, is the discipline that studies these processes. If you have been bitten by the economic bug, then it is probably best to discover how economics helps illuminate the different choices you have in life! If you find yourself stuck at any point, and need economics tuition Singapore, feel free to get in touch.

The Study Of Economics Is Vital

The study of economics gives you the perfect tools to understand and solve the issues facing the world. Policy makers, populists, central bankers and regulatory bodies are grappling each day on a huge range of problems. Members of Parliaments (MPs) representing your constituency may face a serious threat to their authority if their opponents are able to pick a faux pas with their existing policies.

Rule #1 – Never lose money. Rule #2 – Never forget rule #1!

Warren Buffet’s ‘elemental make-up’ may be described across a multitude of financial weblogs, but have you ever wondered what sets him apart? Over the last few decades, we have come to know so much about the man and the golden touch he possesses, yet the crux of his unprecedented success seems to have remained a complete mystery! A statistical outlier with his unmatched, awe-inspiring stock-picking abilities, Mr. Buffet defies all odds. Understanding his journey towards success requires a brief detour into modern economics theory.

He Who Pays The Piper Calls The Tune

Understanding economic theory allows us to make informed choices and critically analyze the challenges associated with the financial systems in place. Students dissect linkages between trends, producers and consumers and use elementary theories to diagnose the causes of major interruptions in economic performance in the past. Knowledge of the economics can help promote a healthy economy. It encourages critical thinking and involves use of statistical tools to put abstract concepts to practical life.

Critical Thinking — Quick Question

You have just set up a new stall selling sandwiches. You are now looking to recruit two people who would manage the store. You think of the following two strategies:

You could hire a baker and a chef, separately.

You hire two people who can do everything from appetizer to dessert individually.

Which option would you select depends on which strategy produces more meals in a given period of time. Right? Explain why you would prefer to hire specialists (the first option). This, of course, is an uber-simplified, microcosmic example. However, it clearly is true to the economic theory: understanding relationships.

What You Can Do Being An Economics Graduate

Economics graduates have countless doors to make their way through various industries. Be it Policy Planning Institutes, Investment Companies, Think-tanks, Urban Policy planners, Trade Policy Analysts or Economic Consultant, the scope of the opportunities are wide-ranged. Economic theory can also be applied to understand and lessen crime! So if you’ve recently kicked-off your university adventure or still experiencing difficulty understanding the driving force of the economy we live in, contact us for economics tuition Singapore. Maybe you’re not 100% sure what majors or minors suit you, get a taster to see what’s on offer by attending an economics tuition session.

Need help to decipher inequalities in distribution of resources, free-trade advantages, Marxism and economic development? – Get economics tuition Singapore at Economics Cafe!

Christopher Lau

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