It is vital for a country or individual to apply the concept of Economics on its economic consequences. The basic definition of Economics has been presented by two of the great authors of their time named Alfred Marshal and Adam Smith. According to the concepts of these authors, Economics is the name of how to earn the money and how to consume it.
There are two different types of economics, which particularly are Microeconomics and Macroeconomics and both of the branches have their own recognition and importance. Opportunity cost is one of the most important economic concepts which would have been applied over different concepts. Theoretically, any cost of alternatives that must have been forgone in order to pursue a certain action is known as Opportunity Cost. Opportunity Cost has been regarded as a benefit that could be received by an individual by taking an alternative action into account. Opportunity cost is one of the most integral and vital concepts that come under the umbrella of individual as well as macroeconomic analysis.
The main perspective of this assignment stride upon the concept of Opportunity Cost and it is required to analyze the importance of Opportunity Cost in a certain situation. It is required to analyze a certain article in order to complete this particular section of the report. The name of the article that has been used in this analysis is “The Persuasive Power of the Opportunity Cost”, written by “Timothy Taylor”, one of the great authors of their times. It is a blog and the analysis would have been on the same (Taylor).
The entire analysis is primarily based on three numerous examples which are purchasing attractive stereo of pioneer worth $1000 or to get the same product manufactured by Sony, worth $700 that enables the purchaser to save $300 and could be used to buy some other items. The stereo cost is different in each of the mentioned brand. However, the CDs were considered to be a better option to utilize that $300 amount. Throughout the blog, Timothy observed that by considering all the examples, it would mean a lot for a concerned purchaser, who is intended to utilize the amount accordingly. Therefore, the first option of the purchasing stereo under the label of Pioneer brand with worth $1000 is not a beneficial one, and it shouldn’t be taken into consideration. Conversely, it would be more beneficial to buy Sony stereo of cost $700 that allows the consumer to save $300 in total. It is quiet a sensible decision to get Sony’s stereo by paying the cost of $700 and save a reasonable amount up to $300. The respective amount that would be saved from stereo purchasing can be consumed in the different area or having the option to buy the CDs with this amount. As per the psyche, having two products is better than having a single one. Hence, the best or valuable handling of saved net amount i.e. $300 is to purchase CDs. The certain features that may affect the decision of a pioneer product with net cost $ 1,000 as compared to stereo of Sony, but there would be a certain difference in some features such as superior quality relatively with the same product offered by Sony.
Nevertheless, every buyer has to make critical thinking and keeping eye on their own pocket, while shopping any certain item, the appropriate classification of things should be applied such as opportunity cost and consumption. All of the three scenarios are about to describe the opportunity cost described in the case, which is used to assess the value in terms of all of 3 different alternatives.
Works Cited
Taylor, Timothy. "The Persuasive Power of Opportunity Costs." CONVERSABLE ECONOMIST 21 July 2011.
