Introduction:

The definition of economics is well known to everyone. The definition of economics is “the social science that studies and identifies the scarce material to individuals, governments and to the nation”.

The above definition of economics makes little sense to the layman. Therefore, economics with example would make it easy to understand the use and application of economics in real life. A few questions and the answers will help us to understand the definition and application of economics in real life scenarios. What will be the life like 2016 to 2026? What will you do after college? How much will you earn from the first job after college? Where will you live and who will be your friends (girlfriend/boyfriend)? Who might you marry? Will you buy a house in new few years, what will be the cost of the house?

The specific answers of the above question will help us understand the basic concept of economics. The salary of the job is discussed in the opportunity cost, i.e. the cost of an opportunity foregone. Answer to the question “What will you do after college?” will give us the idea of the state of economy for that period. Whom will you marry has to do with the cost and benefit analysis of the persons you date. The answer of the question “Will you buy a house in new few years, what will be the cost of the house?” will give us the idea of the housing market of that period of time. How many friend or girlfriends or boyfriends you have or will have, are connected to the theory and concept of scarcity.

Discussion:

We people do have to make choices to attain the ultimate goal of consumption. The wants are unlimited whereas the resources are limited. Due to the scarcity of the resources the allocation of the resources has to be made with great care. The firms and the government are also facing the same problem in allocation of the resources. We live in a world with limited resources be it labour, machine or natural resources. The trade of takes place as the society and the firm have to device about producing a good or service, as it would compel to produce less of other good and service (Chand, 2015). The trade-off will occur and the questions will be raised and to be answered for allocation of the resources judicially and to produce goods and services according to the need of the society. The questions will be raised are;

• What good or the service to be produced?