Buy custom Apply Microeconomic Concepts to Your Own Life essay
Microeconomics is not just a scientific theory. We come across microeconomic concepts in our everyday lives. In fact, all of them can be found in the real life. In this paper, I will explore the manifestation of microeconomic concepts in my life. Such concepts as marginal utility, demand, and market structures will be covered.
Marginal utility is the utility of every next unit of a particular good consumed. The law of diminishing marginal utility affirms that every next unit of a particular good consumed brings less additional utility to the customer. I can apply this concept to my life. For example, it is hot, and I want to drink. I buy a small bottle of water and get a maximum utility from it because I am thirsty. If I buy one more bottle, I will receive additional utility. However, it will be lower than the utility of the first bottle because I do not feel as thirsty as previously. Every next bottle of water will have lower utility than the previous because a human can drink a limited amount of water. Finally, after a certain bottle, utility can even become negative.
I my everyday life, I buy something almost every day. I have demand for particular goods and services. My needs for them depend on many factors. Not only price is important for me. Some goods are equally demanded by me regardless of the time of year. For example, I need such products as bread, milk, and vegetables all year round in equal amounts. Some goods are demanded by me only in special periods of year. For example, I need particular clothes for a particular season. Some goods are demanded by me in different amounts depending on the season. Forinstance, I consume more ice-cream and bottled water in summer and more tea and coffee in winter.
My demand for certain goods depends on many factors. One of them is price. For example, I want to buy a smartphone and a tablet. I have $600. Both of them cost $300, therefore, I will spend $600 if I buy them both. For example, the price of a smartphone and a tablet grows up to $500. In such case, I would not have enough money to buy them both ($1,000). Instead of purchasing two goods, I should choose only one of them. If the price is $700, I would have money neither for a smartphone nor for a tablet. Therefore, I would not buy them. It is an example of demand curve in my life. For the goods that are not of prime necessity, my demand falls when the price grows, and vice versa. In other words my demand for such goods is elastic. It means that if the price grows, I demand less goods, and vice versa.
However, in my everyday life, not all goods and services are demanded only on the base of their prices. Some goods are exceptions, for instance, the products of prime necessity. If I do not buy a smartphone, I will be able to live normally without it. However, this rule does not work for water and main food products. They are necessities. For example, I drink a particular amount of water per day. If its price rises, I will not buy less water because I will not live without it. I will purchase the same amount for higher price. In order to receive additional money, I will give up some other goods that are not so necessary, for example, candies. If the price for water falls, I will not buy more water. I do not need so much. My demand for water is stable. It doees not depend on the price because water is a product of prime necessity.
One more microeconomic concept I face in my life is the concept of market structures. I buy different goods and services, and they are produced under the conditions of different market structures. Perfect competition does not exist in real life. At the same time, I come across monopolistic competition, oligopoly, and monopoly. When I buy clothes, they are produced in monopolistic competition market. There are numerous clothes producers, both national and foreign. There are some barriers to entry the market like quality regulations. However, it is not very hard and costly to meet them. As a result, the choice of clothes is very wide. I can choose numerous brands, prices, and fashions. When I buy a computer, it is an oligopoly market. Numerous barriers to entry the market exist. A company needs large capital amount and qualified employees to produce computers. In addition, many costly patents and licenses are required. As a result, there are several computer manufacturers in the market. The choice of computer brands and models is not as large as for clothes. I face with monopolies in my life, too. For instance, I cannot choose the company that provides me with electricity or gas. Typically, the company which supplies these resources is a monopolist determined by the government. Therefore, I cannot choose a provider or price.
To summarize, microeconomics is not just a theory. All of us come across microeconomic concepts in our everyday life. In this essay, I explored the concepts of marginal utility, demand, and different markets structures in my everyday life.