How did we get here? (Repeat)

From an individual perspective, economics frames many choices we have to make about work, leisure, consumption and how much to save. Our lives are also influenced by macroeconomic trends, such as inflation, interest rates and economic growth.

Economic Organisation Levels

It determines The opportunity costs we face in deciding what to buy, and because we spend our time to earn money, it affects how we use our time. Inflation, economic growth and employment prospects affect our living standards, so do individual markets like housing market. We may not like paying petrol tax, but if we see it helps to reduce pollution and congestion and the tax revenue is used to subsides public transport, it gives a different perspective. Consumers’ cost of living depends on the prices of many goods and services and the share of each in the household budget. To measure the average consumer’s cost of living, government agencies conduct household surveys to identify a basket of commonly purchased items and track over time the cost of purchasing this basket.

Opportunity Costs is the value of the next-best alternative when a decision is made; it’s what is given up.

Inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country. But it can also be more narrowly calculated— for certain goods, such as food, or for services, such as a haircut.

We are constantly faced with choices. It may be a matter of limited time. For example, at the weekend: We could spend 8 hours working in a cafe at the Minimum Wage of €10.50. Or we could spend 8 hours studying for our A-Levels.Alternatively, we could choose to spend 8 hours of leisure (sleeping in, social media e.t.c.) Each choice has an opportunity cost. The opportunity cost of earning 8 times €10.50 = €84, is that we don’t have time to study. This could lead to poorer exam results, which could lead to lower future earning potential.