Project #79930 - Mankiw's 10 Principles of Economics

Please pick one of Mankiw's 10 Principles of Economics and explain how that principle is applicable in your life. I have done a sample post to help get you started

Principle number five, trade can make everybody better off.

I work as an economics instructor at West Hills College. I specialize in teaching economics classes and am compensated for being a “specialist" in teaching economics. What I am able to do with the money earned as an economics instructor is buy the things that I am not as efficient as somebody else in producing.

For example, I have absolutely no idea how to work on my car. I understand the principle of a car and an engine, I understand that we need to take care of our engine to have it run good for a long time. I understand part of that process is getting the oil changed. However, changing oil is actually quite a specialized job. There are at least hundreds if not thousands of different kinds of cars out there.  Each car has unique filters, gauges, specific oils, specific places for oil drain, etc.  I could probably figure out how to change the oil in my car I doing a bit of research, finding a few new tools, finding a place to properly dispose of the oil, etc.

But rather than figuring out how to change the oil in my car, what I do is I exchange my knowledge of economics, and the money that I earn from teaching economics for the service of getting an oil change on my car done by an “expert”. The person who changes the oil in my car has training, proper tools, proper disposal methods, and an understanding of the basics of changing the oil in a car. Not to mention, and perhaps most importantly, own expert can change the oil in my car in about 15 minutes and guarantee that it's done right. I could change the oil in my car but it would probably take me three hours and there is absolutely no guarantee that it's done right.

Now the person who has changed the oil in my car, receives money for their service, or for their “expertise”. They can perform the job of changing the oil in a car more efficiently than most other people. They then can take the money they earn from changing oil in many cars (as they can do many more cars per day than an individual who is not a specialist could do because they have the right resources), and use the money to them to purchase specialty items from whomever they wish.

For example if the oil service person likes fresh bread, he or she does not need to necessarily learn how to bake fresh bread, they just need to learn where the “ bread specialist”  has their operation. :-)

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Due By (Pacific Time) 08/22/2015 10:00 pm
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