Monday, May 11, 2009

Microeconomics and my life

George Bernard Shaw once said, " There are two tragedies in life. One is to lose your heart's desire. The other is to gain it."

Many many years ago, I had a compulsory course in social studies, that entailed a smattering of microeconomics. The course dealt with the usual demand - supply curves, elasticity, price floors, ceilings and the like, that'd generally leave me alternately staring at the floor and the ceiling, dazed, crazed and totally flustered with markets! That was the only time in life, when I actually fell out of love with shopping. I detested the very appearance of shops selling stuff in return for cash - (cash mind you, is only a medium of exchange and hence has no intrinsic value as such - which makes me wonder, why bother about pay scales while hunting for a job!) Anyway, I hated the very term microeconomics and all modalities associated with it. And the funniest thing was that back then, I was quasi communist, without even having heard of Che Guevarra, or Mao thanks purely to the course structure that exalted Marxist principles, with little regard to peoples' economic preferences. Well, if someone was actually paying heed to peoples' economic preferences, I might have chosen against microeconomics back then!

But, back to Mr Shaw. How does he relate to my history with microeconomics?

Simple. Over the past two weeks, I have had the opportunity to learn microeconomics of a different sort. Honest! The minute I heard that Managerial Economics was microeconomics, nightmares of my past rendezvous with the subject came back to haunt me. And I wondered why I could not just stick to macroeconomics, reading about inflation and money supply without having to worry about floors and ceilings. And then I got into class. And that is where I found that microeconomics, when dealt with nicely, actually was my heart's desire! I loved the thought-provoking method in which it was taught. I was stumped to see that we can have a microeconomic explanation to why we were hit by a recession. I was pleasantly surprised to realize that I was actually liking what I was learning, and was awestruck by the fact that I was actually applying thought to what I was learning. And full credit to the teacher, who decided to adopt an offbeat approach to the subject. And that is when I realized that over the past so many years, subjects I have loved, have always had awesome teachers - take English or math in school, or eighth grade history - Mrs Sequeira introduced the French Revolution with Marie Antoinette's quote! And now, microeconomics was introduced in an all new dimension by Prof Kapoor.

But today was his last class. And I wonder whether I will continue to love the subject as much, or whether I would encounter the second tragedy - losing the affection for my heart's newly found desire - Microeconomics!

Apart from my story, there was once an episode in one of my favorite shows - One Tree Hill, that actually viewed the interpretation of this quote by each of the show's main characters. I personally loved it in the context of the show, since each character gave his/ her interpretation based on their track on the show. I found the video grab of that section on YouTube. It's right here.

So, till next time - Happy theory of price to you.....


Jasnoor said...

Nice one :)

Economics was fun tho, gotta admit, esp the way it was taught ;)

Vinit Garg said...

I can objectively relate to the whole thought. Why Reliance / Tata lobby to government to allow phased FDI, Why AIG was bailed out n not Lehman, What's role of government, and what are eunterpreneurs made for... the list goes on !! The dimensions Mudit has unlocked has been truly awesome. Well captured!!

classified said...

Hey there,

a) Explain carefully, with examples, what is meant by the concept of Marginality?

b) Give a non-economic example of how comparing marginalities can lead to an optimum result.

c) Show how this applies to profit maximisation in perfect competition.