How do you apply Economics Concepts in Real life Situations?
Introduction
Why are Safety seat for children mandatory in vehicles and not necessary in planes?
The concept of opportunity cost is applicable in this instance. Opportunity cost is the cost of the
alternative item or product or service that was not chosen or the one that’s foregone. An extra
seat in a plane is very costly compared to a ride in a car. An extra seat may cost up to $1000 per
a seat. It would be very expensive to pay for extra seats for many children. The relative
opportunity cost of actually using a safety seat is less or much lower in private vehicles than on a
standard flight. In case of an accident, the child who is strapped in a safety seat is most likely to
escape unhurt also vehicles have a lot of room than in a plane. The chance of a vehicle being
involved in an accident is many times more in a vehicle more than in a plane.
Why are Braille buttons included on ATM keypads?
The concept of opportunity cost is also applicable in this instance. Opportunity cost is the cost of
the alternative item or product or service that was foregone or not chosen. The keypads on the
ATM serve the Blind people who may want to or in need of using them. They don’t cause any
harm to other users besides the opportunity cost of not putting them there is much higher than
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putting them there. The Braille dots are needed for their walk up machines and so it’s less
expensive to make all the machines in a similar way.
Could a reduction in the supply market of illegal drugs cause an increase in drug-related
break-ins and burglaries?
Yes. The reduction of the supply of drugs would cause the demand of the drugs to rise because
of the reduced supply. This is normal for the demand and supply curves i.e. if the supply reduces
the demand increases and if the supply increases the demand reduces and also the prices follow
the same pattern. The prices increase if the supply reduces as there are more people chasing
fewer goods hence the sellers increase the prices. The same way if the supply increases then the
prices reduce as there are more goods in the market than what’s needed. The results are that the
sellers would reduce the prices of their goods in order to entice the buyers to purchase more
goods. The burglaries would increase because the drug addicts will need more money to
purchase the drugs. These will make them break into homes and business establishment to look
for additional money to buy the drugs.
Why are their more fluctuations on gasoline prices than the prices of automobile?
The concept of demand and supply apply in this case. The higher the supply the lower the
demand and also the less the price and the lower the supply the higher demand and also the price.
The gasoline prices are mostly controlled by the external markets and other global agreement by
the petroleum or oil producing countries. Such bodies like the OPEC (Oil and Petroleum
Exporting Countries) came together and formed monopolies that control the Oil and gas market
and they control the world prices. The prices of gasoline are controlled by such organizations
which have formed a cartel that control the oil market by limiting the supply of oil and in order
to create more demand for the oil hence increase in the prices of oil and its products. The prices
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are controlled by cartels that set the prices arbitrarily hence the fluctuations. Automobile costs
are usually determined by the market forces. The efficiency of the production processes will
ultimately influence the cost of the automobile,
Why are there different charges for plane tickets in Hawaii especially for business traders?
The principle of price elasticity applies in this question. It’s the amount of percentage change in
the quantity demanded which is divided by the price change. The people whose trips are from the
US i.e. mainland are most likely on vacation. The people whose trips originate from Hawaii are
most likely business people. People on vacation can spend their time in any location within
Hawaii but those on business cannot be booked in any hotel as the nature of their business will
dictate where they will be booked in. This makes the price elasticity for the business people to be
much higher than the leisure or holiday makers. This is the reason why flights originating from
Hawaii are more expensive.
