How People Make Economic Decisions - 774 Words

How People Make Economic Decisions Brittany Hansen June 2011 Mr. Krupka How People Make Economic Decisions From the time a person starts working to pay bills or buy products they are forced into making decisions that will affect their bank account. There are four different principles that play into the decision-making process. While these decisions will affect marginal benefits and costs, there are incentives for the choice as well. The principles of economics relate to the working of the economy in many ways. These attributes assist in the interactions that can affect our current economic system also. Principles of Individual Decision-Making The four different principles of individual decision-making are: * People make†¦show more content†¦The benefits would be minimal. With all of my options placed in front of me I decided to stay in school to continue my education. Principles of Economics The principles of economics affect the economy in many ways. With every decision made by each individual the economy either suffers or benefits from it all. The interactions faced daily have created our economy now. The decisions trickle down the line starting with the person who is late with their bill to the CEO of the company. Eventually the company can suffer from too many customers not paying on time. Main Attributes of Economic Systems The market economy is an economy in which most goods and services are produced and distributed through a free market (Merriam-Webster, 2009). This market is governed by the people and not the government. It gives freedom to the producers to create what is needed and wanted in a truthful manner, rather than what the government believes is needed and wanted. The centrally planned economy is defined as an economic system governed by the state and government rather than the interaction of the consumer and business. This economy seeks control of what is produced and how it is used and distributed (Investopedia, 2011). Mixed Economy is a combination of private and public enterprises. The private and public sectors share the production of goods and services. This is also known as a dual economy (BusinessShow MoreRelatedHow People Make Economic Decisions677 Words   |  3 PagesHow People Make Economic Decisions Paper ECO/212 How People Make Economic Decisions The economic decision an individual, household, or even a firm makes has a major impact on the economy as a whole. These decisions affect the supply of a good or service, the demand of that good or service and ultimately the price of that good or service. This paper will focus on how individual decision making affects an economy, how understanding the marginal benefits from the marginal cost affects economicRead MoreHow People Make Economic Decisions Essay672 Words   |  3 PagesIn today’s economy, decision-making skills vary for each household; however, the bottom-line goal for every individual is to get the most for their money. In order to do this, there are 4 principles of individual decision-making: facing trade-offs, evaluating what one is giving up to obtain their goal, thinking at the margin, and responding to incentives. The first principle in individual decision-making is facing a trade-off. In order for individuals to accomplish their goals or to obtain somethingRead MoreHow Economic Decisions Are Made716 Words   |  3 PagesHow Economic Decisions Are Made Penelope Carter ECO 212 April 2, 2012 David Smith How Economic Decisions Are Made If 10 people with 10 different occupations are asked to define economics, one would receive 10 different answers because the concept of economics confuses people. â€Å"Economics is the study of the choices consumers, business managers, and government officials make to attain their goals, given their scarce resources,† (Hubbard O’Brien, 2010, p. 4). Oftentimes, people do notRead MoreKey Principles of Economics1453 Words   |  6 Pagesstudy of economics is vital as it provides an understanding of how the world works. It is the study of how people choose to use resources to improve their well-being. According to Samuelson (1948) â€Å"Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people.† This paper will outline the 10 key principles of economics. These principles are grouped into the three 3 categories of â€Å"How people make decision†, â€Å"How people interact†Re ad MoreClassical Financial Theory : Cognitive Psychology And Economics952 Words   |  4 Pageswhat influences people’s decision making can help solve some of the world’s most complex problems. Research in the financial sector has been dumbfounded by this very question since the advent of the stock market. Classical financial theory assumes investors behave with rational expectations in order to maintain an efficient market. Yet as we know, the idiosyncrasies in human behavior vary and financial markets tend to fluctuate up and down as a result. Recently, economics has begun to adopt the insightsRead MorePersonal Economic Decisions1455 Words   |  6 PagesHead: Personal Economic Decisions Personal Economic Decisions How People Make Economic Decisions People make economic decisions on a daily basis, from choosing to go to the grocery store and cook dinner or going out to eat. While in the general scheme of things this is a relatively small decision to make it still can have impact on the economy. Yet a decision for a family to have a child is more of a major decision and has far more of an impact on the economy then a dinner decision. There are fourRead MoreCognitive Economics : Behavioral Economics1115 Words   |  5 PagesBehavioral economics has also consulted inter-temporal choice. Inter-temporal choice describes to how humans decide about what and how much to do at different times when decide at a time effect the facilities available at another time. Choice under risk or ambiguity relates the dual-system theory. Research suggests that people’s decisions can be affected by the â€Å"type and amount of information† they find. A behavioral equilibrium depends on people take from frequently acts their equilibrium s trategiesRead MoreEcons1089 Words   |  5 PagesMANAGERIAL ECONOMICS Dr. Gong Jie National University of Singapore Why Do We Study Economics ï  ¶ People have to â€Å"Choose† â™ ¦ Resources are scarce. â™ ¦ There is No Such Thing as Free Lunch! ï  ¶ Economics: the science of Rational Choice â™ ¦ Rationality: the basic assumption â™ ¦ Rational Choice: Economic agents use all the information available to make decisions that most efficiently satisfy their needs and achieve stated objectives. â™ ¦ How do people make rational choice? This is the subject of Economics! PaulRead MoreEconomic Decisions Paper685 Words   |  3 PagesHow People Make Economic Decisions Paper Eco/212 September 28, 2010 Making Economic Decisions Economic decisions made by individuals can affect the economy. The principles of individual decision-making include people being rational, economic incentives, and optimal decisions made at the margin. Trading the three economic systems are market economy, centrally planned economy, and mixed economy. Each contains their own attributes on how they contribute to an economy. The current economicRead MoreEconomic Guide to Everyday Life Decisions Essay522 Words   |  3 PagesEconomics guide everyday life decisions As my major is economics, I have leant how economics guide everyday life decision. Economics is the study of how people seek to satisfy their needs and wants by making choice. Because we all have limited resources, we have to make decisions daily. For example, gasoline. Are we going to stop at the first stop on the way home or are we going to check the price first and get gas in the morning. When decisions are made, they are usually based on supply and demand