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BOE Assignment1 AyushNigam

This document discusses key concepts in economics including limited resources and unlimited wants. It provides examples of how these concepts apply to personal decisions around purchasing a laptop and car. The first section defines limited resources/unlimited wants and how it leads to scarcity, choice, and optimal resource allocation. The second section describes the author's process in choosing a laptop, comparing specs and prices of two options before selecting the more affordable HP Pavilion. The third section outlines a similar process for a family choosing between two Honda car models, with the Creta selected as best fitting their larger family size and long-term needs.

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Ayush Nigam
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40 views4 pages

BOE Assignment1 AyushNigam

This document discusses key concepts in economics including limited resources and unlimited wants. It provides examples of how these concepts apply to personal decisions around purchasing a laptop and car. The first section defines limited resources/unlimited wants and how it leads to scarcity, choice, and optimal resource allocation. The second section describes the author's process in choosing a laptop, comparing specs and prices of two options before selecting the more affordable HP Pavilion. The third section outlines a similar process for a family choosing between two Honda car models, with the Creta selected as best fitting their larger family size and long-term needs.

Uploaded by

Ayush Nigam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Basics of Economics: IPM 21-26

Limited Resources, Unlimited Wants


 Meaning
As the core founding concepts on which Economics is fundamentally based, this topic
focuses on the limited availability of resources and their maximization to their fullest
potential in order to satisfy a fraction of the ‘unlimited’ wants of mankind. This is
based on the fundamental principle that we live in a pseudo-dystopian world, wherein
resource allocation is important and equitable distribution is key to maintaining
social and economic harmony.

 Importance of choices
When faced with the prospect of having limited resources, we tend to bloat and
enlarge our satisfaction by choosing the better alternative (quality of a rational
consumer). This leads to us essentially losing out on a possible scenario where we
could have chosen the alternate resource. This is precisely where the concepts of
Opportunity cost and consequently, Cost-Benefit Analysis. Everything essentially
boils down to the crucial concept of scarcity, which then leads to the crucial
questions of what, how, and for whom to produce from our bounded bundle of raw
materials.

This is where the prospect of choice becomes a force to behold; for it could either lead
to customer satisfaction or could lead into the sunk cost fallacy, among other things.

 Factors affecting Optimal Resource Allocation (ORA)


1. Supply and Demand: The availability, paired with the means to obtain a resource
together correlate to the price of the commodity.
2. Cost-benefit analysis of a product: How much satisfaction/utility we derive from a
product directly correlates to the value we essentially anoint to it.
3. Differentiating between a need and a want.
4. Efficient methods of distribution of resources including effective channels.

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5. Gauging which portion of the public would benefit the most from a given resource, and
ensuring equitable distribution.

Personal Experience – The Laptop Conundrum


This concept was directly applied in my life when the need for a laptop in my life arose; I required the
same for not only attending college in times of lockdown but also to manage assignments, do
additional course works, get online certifications, learn more through websites and downloaded books
and lastly, streaming content on platforms such as Khan Academy and YouTube which would help
me expand my knowledge over the required curricula of subjects.

Then began a month-long intensive ‘research’ into my minimum specification requirements for what
would qualify as my everyday companion for the next 5 years. Going through the websites of roughly
15 brands and reading reviews after correlating and matching products with my minimum specs, I
narrowed my decision down to two laptops; HP Pavilion and Acer Swift.

My minimum requirements and the respective analysis is as follows

Component HP Pavilion Acer Swift


RAM 16 GB 16 GB
Processor Frequency 2.4 GHz 1.6 GHz
No of Cores 4 6
Graphics Card Nvidia None
Processor Intel i5 AMD Ryzen
Storage 500 GB 1 TB
Price INR 65,000 INR 80,000

I had to analyze both the products as an individual entity as well as the company which
manufactured them; since my experience over the next 5 years would not only be interacting with the
product but also visiting their stores in case of any discrepancy or accidental damage (along with
regular maintenance every couple of years)

As mentioned earlier, both these choices satisfied my basic requirements, and then gave me some
room to still function. However, there would be incidental expenses such as warranty, accidental
damage, and also Antivirus, which would add to the price.

Since Price always has one of the prime factors affecting my decisions, I erred on the side of caution
and wen for the HP Pavilion 2021 Edition. I saved my costs while still fulfilling my needs and wants.
The risk factor here would be that HP services in Hyderabad may not be as well-coordinated and easy

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to access and compared to Mumbai, and the laptop could still malfunction, leaving me in a fix. My
opportunity cost here would be Acer Swift.

Personal Experience – The Car Recalibration


These Economic concepts were again proved to be extremely relevant when the prospect of buying a
new car came around. The older car that my family was using had been worn out, and being a second-
hand sedan, we could all tell that it had seen better days. The engine was faulty, internal connections
were broken and elementary functions such as rolling the windows were not possible there.

That led to the whole family planning a half-year-long schedule to shortlist and select a car. Again, we
went through 16 different company websites and hundreds of car models before shortlisting the final
two; Honda Creta and Honda Venue. Their respective specifications are listed below:

Component Honda Creta - EX Honda Venue – SX


Engine Petrol Hybrid – Petrol + Disel
Capacity 1497 cc 999 cc
No of cylinders 4 3
Fuel Tank Capacity 50 L 45 L
Mileage 16.8 kmpl 18.15 kmpl
Seating Capacity 5 4
Price INR 11,00,000 INR 9,00,000

Honda has a widespread web of service centers in and around the Mumbai Metropolitan area, which
made it easy for us to choose a company to rely on. It gave us an economical sense of a brand and
allowed customizability while maintaining a minimum standard of both security and function.

The risk here could be sudden unavailability of Honda service centers, or fault in the insurance policy
in the event of an accident. Since we knew there would be additional investment such as upgrading
certain portions of the car in the future, maintenance and upkeep, etc. we planned out the next 10
years with each model to see what the Cost-Benefit Analysis would be.

Since we were a family of 5 and had a higher requirement for a long-term sustainable vehicle capable
of lasting at least 20 years with minimum wear and tear, we went for Creta EX. For the funding of the
same, we relied on a mix of inputs from my parents, my sister, and a loan for the same, to ensure that
the liability was limited.

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The opportunity cost here was the purchase of a Honda Venue, which would have satisfied our needs,
had our family been smaller or our use less frequent.

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