Thinking Like an Economist

Abstract

Sunset or Aurora? They asked. Answered a few, abducted by the icy world filled with auroral sky. Others feature themselves in the beauty of the setting sun. Lying on the cold hard ground, rest eulogized their own preference and choices. These choices and perspectives define the behaviour of a person or a community, influenced by a variety of factors. The plethora of emotional and practical, seemingly economical combats of choices lead us to study the rational economic behaviour of the rood. People have the liberty to choose from a small seed to choose which cake to buy. In the language of economics, it is referred to as a rational choice theory. Rational behaviour is defined as - Rational behaviour is the crown stone of rational choice theory, a theory of economics that assumes that individuals always make decisions that provide them with the highest amount of personal utility. These decisions provide people with the greatest benefit or satisfaction given the choices available, and ironically, they are influenced by various factors. One such factor is explained by self-written poetry:

I am your stan!
Mr. Ronald.
You know, know I am Mr. Donald,
The reason I am your fan.

Alas! Alas, life tucks
because empty pockets yucks,
My apologies Mr Ronald
'Cos honesty, just folded up.

As sadly as I bought Trimax,
the broke me,
forced the
TRIMAX.

The poetry illustrates the choice of Mr Donald for a 'branded pen' which he is sad about as his preference remained unfulfilled because of his economic condition. This states his economic behaviour.

Practical Applications

Economic- social sciences are about the choices of people according to rational choice theory. Rational choice theory is stating that choices are generally associated with the highest incentive provided to them. Rational people tend to gather the entire information like cost analysis, allowance available, utilization of time and post benefits also consider the monetary and non-monetary including internal satisfaction.

"Baby, I'm a nightmare dressed like a daydream" a verse from Taylor Swift's song 'Blank Space' is a real practical example of how generally these so-called rational decisions work for not-so-rational people. But let's, yeah, palaver about good practical examples.

A retirement decision of a person who does a rational analysis of the cost benefits involved in both the aspects involved that are staying in the company or retirement. If the retirement exceeds the monetary and non-monetary benefits and costs. The inclination would be towards retirement according to the choice theory. However, the exemplification substantiates advantages behaviour non less they have enormous limitations elaborated such as

1. Inaccuracy of individuals to numerate costs and benefits of a decision.
2. A negative aspect of social norms is the emotional sympathetic gesture of humans does not follow up self benefits
3. Status quo or prestige may hinder the rational decision
4. Feeling and emotional status add to decisional instability
5. Lack of self-control and urge for immediate satisfaction

Business and Economic Choices

Business environments constitute various external environment conditions such as buyers' monopoly, inflation in the market or consumer spending capacity also called personal consumption expenditure. Mr Donald 'broke me' bought Trimix, as the company was filled with missing elements of his need. Perhaps the study conditions are what we recommend to Ronald pens.

One such behavioural economic signal is Incentive. Incentives are referred to as a payment of concession to stimulate greater output or investment. For a business to create a mass sensation for their product would implement incentives just as Mr Donald was broke and Mr Ronald would provide incentives. Let it be clear, give the buyer what he wants, and just like the footnotes of income tax policy, slide your business, that is the truth and the win.

Consumers tend to learn apparently, they go nuts when spoken professionally but their heuristic behaviour is great leverage when used effectively. Along with the status quo of the learners (the people) is an aspect to be taken care of, at a very micro level though. But majorly the concern is to be about creating a 'The Product' environment, rood generally falls for branding than quality product (quality product branding quality)

Building Assets

Choices arise because of economic scarcity. The room for opportunity cost is created. Opportunity cost is the value of the next best alternative available. Good entrepreneurs understand the choice theory by market forces of supply and demand and get through the boon and bane of opportunity cost.

Now after the established business environment, let's talk about the business model of McDonald's, the tastiest burgers but let's not settle our starvation but rather yearn for the zest. How do McDonald's earn so much with these cheap selling rates? To their astonishment, they sell land, not burgers. They give consumers what they want and run the world's finest business by selling the land and multiplying the land cost by building franchises.

Studying business case studies opens a wide room for innovation. Now as they invested in assets such as building land, normal households with less financial analysis buy liabilities. For instance, with the ground of $10000 general assumption is to buy a house for living and ironically is considered as an asset but when a financial analysis is done it is suggested to invest in a gas station depending on the market and buy the house with the available cost benefit.

The cost of luxury or liability is the sub-expense of revenue from the assets bought or invested. The room for speculation is very well understood by this buying $1 at ₹65 and selling it when the price falls to ₹55. The same goes for cost analysis of assets earning a 14% interest rate from 8% on a home loan is a raise of 6%saving.

Conclusion

Finally, it's an eye reliever to see the conclusion. Let me just summarize the learning and outline just like a well-groomed economist would do.

At the start choice theory explain goes about

1. Consumers have preferences and respond to various incentives
2. their decision is an influential non-rational choice.
3. Status quo and branding go hand in hand and instigate the consumer to non-beneficial decisions.
4. Opportunity cost involved works as grape both sour and sweet at the same time just need to be used appropriately.

The business explained a focus on asset building and product market analysis.

1. Non-rational decisions of consumers create positive speculation.
2. Supply-demand holds hands while determining prices.
3. McDonald's case study explains the best speculation for a well-flourished business.

Apparently, the market environment, consumer choice and company products are important factors of a business. So, let's learn from Mr Donald to be out of the paradox and marketing date baits. Adhere to making the best and most rational decisions and attain enlightenment under a great bodhi tree.

Reference

A Definition and Explanation of Business Economics. (2022). Retrieved 4 September 2022, from investopedia.com.
Rational Behavior. (2022). Retrieved 4 September 2022, from corporatefinanceinstitute.com.
Impact of Economic Environment on Business. (2022). Retrieved 4 September 2022, from yourarticlelibrary.com.