Economists Discover Miracle Hangover Cure Drink Less -Free sample

Question: Discuss about the Economists Discover Miracle Hangover Cure. Answer: From the article Economists discover miracle hangover cure: drink less, Jessica Irvine writes about the opportunity cost of an individual having an extra beer. The writer considers the options that are available to an individual, and how the choices he makes can affect his efficiency. Opportunity cost arises from the scarcity of resources that human beings have coupled with their desire to satisfy all their wants. In addition to this, rational human beings will always want to maximise utility(Salvatore, 2011). Utility is the satisfaction derived from consuming an economic good. Opportunity cost is the cost of the foregone option amongst a variety of choices that a consumer has. In other words, it is the benefit that an individual could have enjoyed, but gave it up for another option. It arises from trying to satisfy the wants that an individual has using the scarce resources available. To study the opportunity cost of tis individual, we have to make a number of assumptions. These assumptions include: The individual has a number of wants that he would like to satisfy at a time using the available resources. Economists know that human wants are unlimited in number. The individual has limited resources that he can use to satisfy the desires at a particular time. Resources are limited in nature. The desires of the individual vary in intensity and urgency. Some desires are more important and urgent than others and have to be satisfied earlier while the less important and urgent can be postponed. The individual is a rational consumer. Rationality here implies that the consumer will want to maximise utility and derive the most satisfaction from consuming a commodity using the last possible resources. In coming up with a model for study ineconomics it is important to state assumptions an example of which are those stated above in the study of the choices and the costs involved in such decision making processes.Economics is a science that deals with laws just like any other science. However,economics is a science that studies human behaviour and humans change behaviour very often depending on the conditions and circumstances that they are in at that particular time. In this case,economics deals with processes that are complex and contain a lot of information. Assumptions in economic models simplify the processes and make them easier to understand the issue relating to human behaviour. Through the statement of assumptions, an economist is able to simplify an economic process and gain an easier understanding for study. Assumptions break down the complex process and allows the economist to develop a theory focussing only on the most relevant variables. This theory can later be applied to more complex cases for further studies. For instance, we assume that the consumer portrays rational behaviour in decision-making and will always want to maximise utility. This way we can construct a theory on how the consumer will make choices and allocate resources. In reality however, human beings behave differently but we can apply the theory based on the assumption to study the general behaviour of people. In the case of Chris from the article, we assume that he is rational and will make the most rational decision. If he chooses to go home and play on his PlayStation, he will have to forego having an additional beer. By doing this he will not enjoy the extra beer and the chance of having a god time with his colleagues (even though he is not much of a drinker and is a loner). The foregone opportunity is the opportunity cost that he incurs. The writer argues that, Hangovers are only possible because ordinary humans often do not fit the model of rational individuals prescribed by economists. To support this argument she reasons that people are not always conscious of the consequences of their actions. Although they may have an idea of the consequences from previous experiences, circumstances usually change and the results of a choice may vary. Furthermore, people will rarely think critically and consider all costs involved, including opportunity costs, in making decisions. We tend to make simple decisions regardless of all the opportunities available and we often succumb to herd behaviour. This is especially true especially to the younger generation who will always want to experience a lot within the shortest time possible and end up making rush decisions. Nevertheless, with age comes experience and as they grow older, they learn to consider all the available options and make rational decisions. Economic agents faced day-to-day scenarios where they have to make decisions that involve foregoing another option. They have to choose the next best alternative to maximise utility and this choice should be the one that minimises opportunity cost. The agent does not have a superior or better method of allocating resources for any available choice(Mankiw. Parthenakis., 2014). This implies that any rational choice is the one with the highest net benefits and the lowest net costs. The assumption here is that the choices are always rational. The economic agent can always change his decision to the most rational because he wants to derive the most satisfaction using the least cost. For example Chris prefers to go home and play on his PlayStation rather than have an extra beer which will cos him more money and result in a hangover the following morning. By deciding to drink more, he will reduce his efficiency. Therefore, he makes the rational decision; changes his mind and goes home. This article not only makes sense in theory, but also in practice. It explains the theory of opportunity cost in the best way possible that any individual can relate with. We can be able to see the consequences of the choices we make on a daily basis and how best to consider the options at hand before making a decision that will affect our objective of utility maximisation. Although it may seem as overkill to consider the cost and benefits in all circumstances, it is always wise to be a rational consumer. References Frank, R. H., Cartwright, E. (2016).Microeconomics and behaviour. Goolsbee, A., Levitt, S. D., Syverson, C. (2016).Microeconomics. Hill, R., Myatt, T. (2010).The economics anti-textbook: A critical thinker's guide to microeconomics. Black Point, N.S: Fernwood Pub. International Economic Association., Agarwal, B., Vercelli, A., Palgrave Connect (Online service). (2005).Psychology, rationality, and economic behaviour: Challenging standard assumptions. 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