tailieunhanh - Why we study economics

We need economics because we as individuals and as a society experience scarcity (of raw materials, of goods and services, of time, and so on) in relationship to our ever-growing needs and wants. Economics examines how we make choices: a new car or college tuition? more hospitals or more highways? more free time or more income from work? It gives us a way of understanding how to make best use of natural resources, machinery, and people s work efforts. | But often, the "do-it-yourselfer" will say that he is doing the work to "save money." "Look," he’ll tell you, "it would have cost me $5,000 to get my roof done professionally. I managed to do it for only $1,000 in materials." An economist is able to point out that his calculation is faulty, and that he may have acted contrary to his own purpose. He has not taken into account the cost of his foregone opportunities. If the job took him 100 hours, and he could have put this time in at work and earned an additional $8,000, he has actually suffered a large monetary loss by doing the job himself. This example turns on dollars and cents, but in other cases, it is psychic costs that we fail to account for properly. When a philanderer cheats on his wife, we may wonder if he has fully considered the costs involved. Perhaps he has, in which case economics can turn the problem over to ethics and religion. But all too often, people take account of the immediately visible profit from an action and fail to account for the less visible, more distant costs. Bastiat referred to this as the problem of what is seen and what is not seen. He felt that it was an important task of economics to teach us "not to judge things solely by what is seen, but rather by what is not seen."