Economics of Daily Life
The supply of our goods stays relatively the same. The demand of flowers is the fluid piece of our industry. When the calendar works towards a holiday, the demand goes up. Take for example, Valentine’s Day, the demand of flowers, more specifically, roses, increase. Our supplier has only a certain amount of flowers available. Because the demand is high, the suppliers cannot keep up and our shops supply gets a bit scarce. The closer it gets to Valentine’s Day the higher the price of roses gets. Our shop sets a minimum for flower orders but then has to raise the minimum because our supplier has raised our price of roses.
When supply and demand is in play the consumer has choices to make. Each customer will have their willingness to pay or ‘the maximum amount that a buyer will pay for a good’ (Mankiw, 2007). The result of their savings is consumer surplus, which is defined as the amount a buyer is willing to pay for a good, minus the amount the buyer actually pays for it (Mankiw, 2007). When ordering flowers, each customer has a price limit in mind for their arrangement. If the price of our flowers is above what the customer is willing to pay they will go somewhere else to find the flowers. Just like the customer, I as a single mom, have a limit that I can pay on things in my life. The biggest item that comes into play for consumer surplus is rent. Having had a price in mind for rent, I went looking for a place big enough for my children and I to live in. Let’s say I budgeted $1000, and looked at 3 different homes.
One home was $1200, the second was $950 and the last was $800. As a person who wants to save money, the larger consumer surplus would be my goal. The first house is obviously not a choice because it is higher priced than what I am willing to pay. The second and third are both options because the prices are under my $1000, and relatively the same size. I opted for the $800 home so that I would have that extra $200 per month to use on food or utilities which makes my consumer surplus $200 per month.
Economics is the study of how people interact with their world. How they make decisions based on price, tradeoffs and incentives. As a mother, this science is my life. I have tradeoffs because of school, work and children. I deal with incentives when it comes to doing chores around my house as well as when I go to work. While at work my life is controlled by the supply and demand of flowers and holidays. When I come home to my house, I am walking into my consumer surplus because of choices I made while searching for my home. As I am writing this I am in the trade off of sleep to complete my homework. Economics has saturated my daily life and will continue to do so. In conclusion, the science and study of economics is in every part of life, and it will continue to be as long as people allocate resources, and manage households.
Broome, J. P., & Preston-Grimes, P. (2011). Open for business: Learning econimics through social interaction in a student-operated store. Journal of Social Studies Research, 39-55.
Mankiw, N. G. (2007). Essentials of economics (4th ed.). South-Western.