Economics for dummies by Sean Masaki Flynn, a book review, PART 2


JR

Jamshidbek Rasulov

August 16, 2024
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Economics is all about the choices — which are made out of limited options to fulfill  limitless wants — the individuals make. Understanding the behavioral choices made in the past, you can predict what will be the next choice of an individual more precisely.
Being rational helps people to make better choices that will give the most happiness. The model of human behaviour made by economists consists of 3 stages: 
1. Evaluate how happy each possible option can make you.
2. Look at the constraints and tradeoffs limiting your options.
3. Choose the option that will maximize your overall happiness.
Lots of times, people try to question this model.
Economists think of individuals as being rational. However, desire of happiness sometimes urge people to make some "tiny" adjustments to their rational choices.
To measure an item's happiness value, economists use the term - utility, as a unit of measure. More you like a thing, the more the utility of that thing. Less you like that thing, the less its utility.
One of  the objections to the model above can be a point about people who help other, also by not being selfish. Economists do have a counter argument for that objection. People always think of fulfilling their self needs, and even when helping others in expense of themselves, they become happy by helping others - that is, their selfless action is motivated by selfish intention. Actually, this selfish intention is a very good thing; for example, when you buy a meal in a restaurant, the chef makes the meal delicious not because he likes you but because he wants your money. In the end, both sides end up happy - you get a delicious food and the chef gets your money.
Time - finite resource you have and the most precious one.
The last thing here is the opportunity cost. The opportunity cost is the cost of an alternative thing which you might have done instead of what you have actually did - it became complicated, let me explain in a simple way. Now, you are "sitting" on telegram and reading this message (actually I don't believe someone will read till this point). So, now you are reading this on telegram because you chose to do so instead of scrolling Instagram reels; why? Because you found that reading this post will compensate and overcome the value of those of Instagram reels.

Enough for today. Enjoy your life and make the best decisions.
 

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