Did I take the blue pill or the red pill?

In simple words, economics is the study of how, where, when, and why we should spend our resources.

When we talk about resources, we are referring to anything we may need to use for producing something.

Let’s say, we need money, time, energy, among other things, in order to create something. However, these kind of resources are scarce, meaning, they are limited. Since we are unable to have everything we desire, we must make choices on how to use them most effectively.

You may not be aware of it, but you make complex economic decisions every time you have to deal with the idea that you cannot have everything you want and, therefore, you are forced to make choices.

All those alternatives that we give up when we choose one thing are called TRADE-OFFS, so for example, What’s the trade-off of reading this text now? let’s say, you could be watching Netflix, scrolling on Facebook, or maybe working off your belly fat? 😃 hehe, whatever…. it doesn’t matter what else could you be doing right now, the whole point of this is that you are actually here and the time reading this article will cost you something and that something is all those things you are giving up for being here with me 😄❤️

…Still here? Great! that means that I am not only a cost but a benefit for you. 😍 So that process in which you choose to do one thing, like staying here with me, among the many options available to you, is what we call in economics OPPORTUNITY COST.

Our human nature is not only motivated by money, but there are also psychic rewards that can lead us to make choices, such as personal happiness, and our own personal values.

Who is the person you are giving up by dating he or she? (cost), and of course, Who suits you best? (benefit).

Here’s a practical way of thinking this, every time you must decide who you should date, you have to decide what is your OPPORTUNITY COST if you date that girl if you date that boy.

The opportunity cost is the opportunity lost. The opportunity cost of dating the smart and intimidating girl is the lost opportunity to date the boring and predictable girl.

At the moment we put the choice into action we will value the chosen option more than the opportunity cost. However, reality can later hit you hard and you may regret your decision.

OPPORTUNITY COST is the most important concept in Economics, and it is the key to that whenever you make a decision, your first thought should be, “What am I giving up to make this choice?”.

This Applies not only to your Personal Life – should I buy this jacket or this watch– but to Business Affairs – should I hire the service of this company or another– and also the way how governments decide over our resources – should we spend the taxpayers’ money on puberty-blockers and sex reassignment surgeries or should we spend that same money on psychological help–

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In summary, there are Three Key Economic Assumptions you should always bear in mind in order to understand the world:

·  All resources are scarce

We have unlimited wants and limited resources and because of that, we are forced to make choices. 

·  Anytime you think you are getting something for free think “TANSTAAFL”

There 

Ain’t 

No 

Such 

Thing 

As 

A 

Free 

Lunch!

Every action has a cost!

Everything has some hidden or implicit cost to someone, you cannot get something for nothing, you always must give up something to get one thing… Money, Time, Energy.

·  Human beings respond to incentives and act in their own self-interest

Morally you may approve or not approve, but the point still remains, Our world is run by incentives. Everyone makes decisions by looking at the additional benefit in the additional cost of his decision. This means that a person or an organization always tends to weigh the benefits and cost of everything before they have made any choice.

Every one use their Self-interest to make decisions in order to obtain a desired outcome

Every action, mental or physical,… made by anyone… at every level… are “SELFISH”. Everything in all of existence exists for itself…

…and it is intended to be so!

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