Question

Describe an economic decision or choice you made recently? Would you consider it to be a rational or irrational one? What are some of the opportunity costs you did [or did not] consider?

Answer 1

Introduction

In microeconomics we all make our decisions at the level of consumer knowingly or unknowingly which is reflective of our individual demand patterns, and translates to market demand, once this is combined.

It is vital for every individual to understand the concepts of economics to be aware of the decision making and make best choices from the available alternatives so as to cash in on these as they arise in real life situations.

Awareness can lead to better decisions which can help us in getting better products with the available funds that we have.

Describe an economic decision or choice you made recently? Would you consider it to be a rational or irrational one? What are some of the opportunity costs you did [or did not] consider?

Being a college/university student recently, my purchase decision was of buying a latest IPhone for which I ended up spending 1000$ resulting in it being the most expensive buys of all times. This was done through my own savings and I later realized that this was not a rational investment.

A rational investment is one which gives us more satisfaction given our budget constraints. Owing to the fact that this was saved money, the opportunity cost lost was spending this money on buying a relatively cheaper phone and investing the rest amount respectively.

Opportunity cost basically arises from the fact that at any given point of time, people can make choices among different products or investment related decisions and can get facilitated if they consider the concepts of microeconomics while taking the final decision.

A person should analyses the cost of the product over a period of time and whether or not the budget would allow for the same. Further, the concepts of microeconomics also help in coming to a relevant combination to maximize ones satisfaction if clearly defined by demand analysis of the buyer.

Please feel free to ask any doubts in the comments section.