CLEAR-JE 1 THINKING LIKE AN ECONOMIST PDF

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Student name:

CLEAR-JE No.

Student number:

1

Word count: 489

Thinking Like an Economist about Buying Flowers My chosen context As a hobby, I like to buy flowers or plants to grow in my garden. The frequency of buying new flowers is about twice a week. The two regular ways I buy flowers are online shopping or driving to a flower market which is 8 km away from my home. Theoretical concepts/ideas After watching the first week lecture of microeconomics course, I had learned many interesting economic concepts that I had never heard before, the following concepts in particular can help me apply to my situation of making decision on the approach of buying flowers: 

Opportunity cost

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Cost benefit principle

My prior assumptions Considering all the benefits and shortcoming of two ways of buying flowers, I had two assumptions. My first assumption was that buying flowers through online shopping should be more convenient because the flowers can be delivered to my home, so I don’t have to pick the flowers up and carry them home. Therefore, buying flowers online would save the transport fees, my energy and time. However, the other assumption was that buying flowers from flowers market instead of shopping online would be cheaper. What I learned Thinking like an economist has provided me a new understanding about how to make choices to maximize my benefits. I have started to consider the opportunity cost when making decisions, if I choose to buy flowers online, it will lead me to a bigger opportunity cost because buying flowers online couldn’t guarantee the flower’s quality and I will give up the chance to select the good ones. Moreover, buying flowers online is more expensive which 1

requires a bigger incremental explicit cost. Hence, my first assumption was wrong. In comparison, my second assumption was wiser considering that I would have an economic surplus when buying flowers from flowers market. The incremental benefits which are a cheaper price compare with buying flowers online are greater than the overall incremental explicit (transportation fees) and implicit (time loss by the trip to flowers market) cost. Reflecting on what I learned To be economic, it is essential for us to think carefully about the opportunity cost when making decisions and whether the decision meets the greatest economic surplus. After this reflection, I have started to realize more opportunity cost I have made in my daily life. For example, I used to be too lazy to sort the household waste, but when I think about the opportunity cost of this behavior, I discovered that sorting out waste like eggshell, banana peel and coffee grounds can be natural fertilizer to plants which is more beneficial. When purchasing a set of products, as a consumer, we should consider whether the value (incremental benefits) of this set of products exceed the price (incremental explicit cost) of it. Incremental implicit cost should also be taken account including time or energy spend when purchasing the set of products. The practical benefits of making effective choice using cost benefit principle and opportunity cost should be able to help us get a better outcome.

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