Economics Essay Example | Topics and Well Written Essays - 1000 words - 27

Economics - Essay Example This is a clear indicator that people are more concerned about health than money. The discovery by economists that money can’t buy happiness is a justification for high taxes and more government spending. According to Lee .D.R (2005), pursuit of money is addictive and reduces the time available for friends, family and other activities that result in genuine happiness. In conclusion, we can not just totally dispute the fact that money does not bring happiness. Money does bring happiness especially with an increase in the level of income (which is a sign of achievement) although the happiness brought by money is temporary. It is very important for people to look for money because it increases their purchasing power .Money also enables one to be able to do what he so wishes, for instance, investment. Money can be obtained by earning as an income, borrowing and from savings. All these three methods of acquiring money have an opportunity cost (defined as the value of foregone opportunity).For instance the opportunity cost of earning income is loss of time for other activities like recreation. Money held as savings has the foregone opportunity of loss of profit for income generating activities in which the money could have been invested. Finally, the foregone opportunity of borrowing is the high interest rates although such borrowed money can be invested in more income generating activities in future. Therefore everyone strives to get money by whatever means considering the opportunity cost. The means of acquiring money whose opportunity cost is low is the best method chosen. Marginal utility of money is the extra satisfaction derived from an extra unit of money spent. Marginal utility of money is never constant because an extra unit of money given to a poor person will add much to his satisfaction than if the same coin was given to a rich person. This means that poorer people