Examples on the Principles of Economics Paper Sample

Introduction

Gregory Mankiw, an American macroeconomist, proposes ten principles of economics. These are the guidelines that govern economics-related operations. The then economic principles can be subdivided into three categories namely people interactions, the decision that people make, and the work of the economy in its entirety. This paper discussed five of the ten principles of economics. It explains these with related life examples for ease of understanding.

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People Face Tradeoffs

This principle is about making compromises, especially in instances when one has several items from which to choose. Individuals do not always get everything they desire; rather, they have to give up one thing in favor of another. Case in point is the Senate's decision to vote in favor of the withdrawal of the United States' support for Saudi forces in Yemen. In this instance, the Senate had a choice to either vote for or against the said proposition. Peterson & McBride, (2018, November 28) write: "The Republican-led Senate...voting to advance a measure to withdraw U.S. support for Saudi-led forces in Yemen and defying top administration officials who...had urged the lawmakers to do the opposite." This is an example of a case where the Senate had options but decided to trade off one for the other. It is evident that theirs was an important decision judging from the interest from top administration officials who wished that the Senate had voted otherwise.

People Respond to Incentives

Incentives solicit positive or negative responses from those to which they (incentives) have been offered. These impetuses can motivate individuals to be more diligent to their duties or may encourage customers to shop at a particular store. Schneier (2018, November 21) writes: "the venerable department stores of New York have marshaled their resources for elaborate displays of festive cheer... the windows help suck customers in." According to this excerpt, the windows are an incentive for shoppers, especially during the festive season. These windows are made such that individuals are attracted to the stores to make purchases. Also, these elaborate displays induce the festive shopping mood hence achieving their (windows) purpose. The elaborate windows, therefore, are good examples of incentives as they (windows) effectively change people's behavior; in this case by encouraging them to shop.

Trade Can Make Everyone Better Off

There are no winners and losers whenever competitors engage in trade. Countries, for instance, cannot operate in isolation since they need to exchange goods and services among themselves. In the same way, individuals must trade goods and services with each other since a person can hardly be self-sufficient. Case in point is America's presence in Afghanistan where the American Soldiers are engaged in combat operations. The United States has the choice of withdrawing its forces from Afghanistan but it chooses not to because, as Board (2018, November 28) writes: "the terror groups operating there would have the unfettered ability to again thrive if the U.S. were to withdraw the last of its troops." In this instance, Afghanistan and America have to work together since both parties benefit from the association. While Afghanistan is able to fight the al-Qaeda militants, the U.S keeps these militants off its borders.

A Country's Standard of Living Depends on Its Ability to Produce Goods & Services

Countries that boast of powerful economies are characterized by high levels of productivity. These countries have adequate manpower and facilities to engage in mass production of goods and provide unrivaled standards of service. The workers themselves enjoy high standards of living if they are able to produce large numbers of goods per unit of time. Simply, an input is directly proportional to the output and this equally applies to a person's health which is determined by the kind of food that they eat. Those who are keen on their diet are healthier than those who are less concerned. For instance, Mele (2018, November 29) says: "participants who ate fried potatoes two to three times a week were at a higher risk of mortality compared with those who ate unfried potatoes." This is a case where people's health is measured by the type of food that they eat; in the same way that a country's riches are dictated by its level of productivity.

Prices Rise When the Government Prints Too Much Money

The last principle indicates that the prices of goods and services depend on, among other factors, the amount of money that is being printed. Inflation occurs when there is a lot of money in circulation causing the price of goods and services to increase. Concurrently, each unit of money loses its value. A similar phenomenon occurs in the tourism industry. The price of accommodation facilities and flights, among others, increases during the high seasons. This increase in price does not necessarily depict better services compared to those offered during the low season. In fact, the chances of encountering congestion at, for example, the beach, are higher during the high season compared to the low season. According to Perkins (2018, September 25), September to early October are the best times to buy air tickets in case of any travel plans in December. Accordingly, if one books too late, "the airlines run out of seats...and prices for the remaining tickets increase." In this case, the price of an air ticket is affected by a large number of people wishing to travel for the holidays. The same air ticket becomes cheaper once there are fewer people traveling and this is similar to the principle of inflation.

References

Board, E. (2018, November 28). The risk to the U.S. in abandoning Afghanistan. Retrieved from https://www.chicagotribune.com/news/opinion/editorials/ct-edit-afghanistan-war-taliban-endgame-20181128-story.html

Mele, C. (2018, November 29). You Don't Want French Fries With That. Retrieved from https://www.nytimes.com/2018/11/29/health/french-fries-nutrition.html?rref=collection/sectioncollection/health&action=click&contentCollection=healthion=stream&module=stream_unit&version=latest&contentPlacement=2&pgtype=sectionfront

Perkins, E. (2018, September 25). Holiday airfares 2018: When to buy, when to fly. Retrieved from https://www.chicagotribune.com/lifestyles/travel/sns-201809250005--tms--travelpkctnxf-a20180925-20180925-column.html

Peterson, K., & McBride, C. (2018, November 28). Senate Vote Is Rebuke to White House Over Trump's Handling of Khashoggi Killing. Retrieved from https://www.wsj.com/articles/senate-vote-is-rebuke-to-white-house-over-trumps-handling-of-khashoggi-killing-1543441725

Schneier, M. (2018, November 21). Why Holiday Windows Still Matter. Retrieved from https://www.nytimes.com/2018/11/21/style/holiday-department-store-windows.html