Essay Example on Efficient Resource Utilization: Unpacking the Intricacies of Economics

Introduction

Economics is the study of how people utilize inadequate resources to generate and supply valuable commodities among different societies. People who produce commodities have to use the few resources efficiently to meet the demand in the society. Economics entails getting to know the performance of the markets and the Macroeconomy. It also aims to assess statistics concerning the condition and situation of the economy. It elaborates on the significance of the statistics. Additionally, economics entails apprehension varied policy options and examining the possible results. Economics concentrates significantly on making society a better place through consideration of the importance of priorities (Alhnaity et al., 2017). This paper focuses on the usefulness of Economics in practice by an elaboration using two examples

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The Usefulness of Economics to the Government

Economics is useful as it facilitates in dealing with defective raw materials of production. It enables in figuring out the likely impacts of running short of resources used in production hence enabling the producers to use the available resources efficiently to minimize negative results such as complete lack of raw materials for production. Additionally, economics facilitates in equal distribution of resources in society. However, the fair distribution of resources creates economic incentives, while insufficiency and unequal distribution result in social problems.

Economics facilitates an evaluation of the extent to which the government should intervene in society. However, free-market economists propose minimal government intervention and free markets. Instead, other economists argue that government intervention can help curb inequality and the unequal distribution of public goods. Economics, therefore, facilitates realizing the negative and positive outcomes of the extent of government intervention in the economy.

Economics assists in the evaluation of opportunity costs. For example, politicians’ promises of providing free goods and the reduction of taxes enable their winning. However, according to economists, everything usually has an opportunity cost on it. Voters forget that they have to pay higher taxes elsewhere to attain free goods and services (Alhnaity et al., 2017). Free services occur due to the government using public money in the provision of free commodities. Moreover, through the consultation of economists, the government prefers using free services in a better way that is more basic than a luxury, hence the opportunity cost.

Economics provides a solution to how an economy can eliminate market failure. Free markets result in many market failures. For example, driving to town creates congestion and pollution. Therefore the government can introduce specific fees for those who drive in town. The introduction of the fee for driving to town will eliminate unnecessary congestion and pollution from exhaust fumes that could cause the failure of other markets in town (Alhnaity et al., 2017). People prefer free goods and services and thus to evade payment fees they could stay away from the town center.

Economics facilitates the government with knowledge and understanding of the current trends. The government employs economists to evaluate reasons behind increasing poverty levels, high rates of unemployment, and slow economic growth rate. For example, a government can prefer leaving individual international unions. Still, before the government makes such steps, it can employ economists to examine the effect of the decision on the movement of labor and economic impacts on immigration. Therefore, out of economics, the government makes informed decisions.

Economics facilitates in forecasts. Economic forecasts are more ambiguous than the comprehension of the contemporary situation. However, even though forecasts are not reliable inconsistencies, they can assist in giving people who make decisions with an ideology of viable results. Economics facilitates making the appropriate decision for the wellness of the government and the people.

For example, in the year 2003, the United Kingdom government decided if it could be better for it to join the Euro. Nevertheless, many economists propose that the United Kingdom could have problems with a standard monetary policy. The problems could emerge as the Euro was not the primary currency used in the region of the United Kingdom (Adriana, 2018). The analysis of economists facilitated the government of the United Kingdom to withdraw the decision of joining the Euro. However, on political grounds alone, the United Kingdom would have joined the Euro. However, the analysis underrated the impact of the Euro on the United Kingdom’s economy.

Economics facilitates the government with varied ways of dealing with an economic crisis. Some activities, such as “the Wall Street Crash,” contributed to the increased unemployment rate. Many western governments debated how to deal with the crisis. Some governments decided to raise taxes, benefits, and tariffs. They were thus making economists such as John M. Keynes come up with a new division of economics that focused on how to deal with the purposeful recession.

Economics is useful in evaluation purposes for a government. Economists can predict for the government about postulated outcomes even though economics is not similar to mathematics due to many unknown variables. Economists can predict varied potential results, thus helping the government to overspend on a particular ideology (Adriana, 2018). For example, a government could hold an ideology of preference for free markets, but an economist can advise the government on the welfare of the economy.

Economics facilitates the government in the realization of behavioral economics. For example, the government can raise taxes in cigarettes to reduce cigarette intakes and advertising. On the other hand, economics can facilitate banning irrational behaviors, risking losing a chance in the stock market. Economists, therefore, examines the best reasons to undertake individual decisions concerning behavioral economics.

Economics is useful in the examination of the market structures that leads to market failures in an economy. Various reasons facilitate the market failures; such reasons include environmental concerns, inadequate public goods, increased and decreased provision of demerit and merit goods, and misuse of monopoly power. Economists, however, evaluate economic forces that create social issues for a government. For example, an increase in the rate of crimes can be as a result of economic costs and benefits.

The Usefulness of Economics to Entrepreneurs

Economics is useful for entrepreneurs as it helps them focus on the maximization of income and earning profit. However, an increase in earnings and profits is vital for the overall economic development as people will be able to pay taxes without any complaints. Economics, therefore, offers entrepreneurs with options of increasing products or reduction in inequality (Mulyaningsih et al., 2017). Through economics, entrepreneurs improve the efficiency of their services in an economy.

For example, entrepreneurs sometimes prefer certain products and services to be free of charge, Facebook’s use. It may be consideration that Facebook does is not an expense for an entrepreneur, but; instead, it takes up much of their time, which the entrepreneur could use in product promotion or better service of their consumers. Choices of entrepreneurs can impact positively or negatively on their income, according to economists. Therefore, entrepreneurs must consider the costs and benefits of the choices they make.

Economics facilitates optimization for an entrepreneur. Business people tend to make minor or significant decisions according to the calculations of the costs to incur and benefits that can accrue from the choices. Entrepreneurs usually weigh the pros and cons before making individual decisions. However, all choices usually tie together as a result of optimization (Mulyaningsih et al., 2017). Usually, business people who apply optimization tend to do things without interruption of their budget. Thus optimization is the co-factor that facilitates the decision making of entrepreneurs.

Economics facilitates an entrepreneur in performance as a result of the influence of their competitors. A decision to outdo the competitors causes a change in the cause of action. For example, an entrepreneur can choose to change their line of distribution in preference of another to attract many customers in the shortest time possible. An imitation by competitors will create an equilibrium hence making everyone in the market to have ambiguity in perceiving what they can achieve upon change of their behaviors. Economics helps entrepreneurs understand statistics and numeracy, thus being able to realize gains or losses in the business. Thus, entrepreneurs get to know much about loans, taxes, and investments hence the usefulness of economics.

Conclusion

In conclusion, economics is useful in various ways. Economics is useful in practice, as explained above in the example of the government and entrepreneurs. Economists are the significant advisors of the government in making choices concerning the economy. Entrepreneurs use economics in optimization to maximize income and profits. Also, economics facilitates entrepreneurs in knowledge about loans, taxes, and significant investments. Ideally, economics is useful in practice that facilitates undertaking informed decisions.

References

Alhnaity, H., Mohamad, A., & Ishak, A. K. (2017). the impact of entrepreneurial attitude on erad’small businesses performance as moderating by government intervention. Proceeding of Icarbss 2017 Langkawi, Malaysia.

Adriana, A. S. (2018). Effect of perceived ease to use and perceived usefulness to the use of e-budgeting system in the regional government. Russian Journal of Agricultural and Socio-Economic Sciences, 80(8).

Mulyaningsih, H. D., & Ramadani, V. (2017). Social entrepreneurship in an Islamic context. Entrepreneurship and Management in an Islamic Context, 143-158.