Economic DecisionsYolanda KinardECO/ 212April 23, 2014
Running head: ECONOMIC DECISIONS
Economic DecisionsWhen making economic decisions we all have to make choices to attain specific goals. We have many wants but the resources have limits. Individual decision-making involves making choices on how to use their limited income on various goods and/or services available to them. People also make decisions about how they will spend their free time. Many outside entities can persuade an individual to use their resources including advertisements, coupons or incentives such as 'buy one, get one free" or saving a certain percentage if you shop on a certain day and time. People must make decisions everyday nearly on everything.The benefits and marginal costs associated with that decisionA decision that was made in which the writer compared the marginal benefits and costs associated was buying a pair of shoes. The highest price the writer is willing to pay for shoes is $75.00. While shopping, the writer came upon a pair of $125.00 shoes. She really wanted the shoes however they were out of her price range. Therefore, she bought a pair for $65.00.The marginal benefits and marginal costs associatedThe marginal benefits associated with this decision are the extra $50.00 it would cost to purchase the $125.00 pair of shoes. That is the extra amount the writer would have to pay to acquire the shoes. The marginal cost associated with this decision is the cost of making more $125.00 shoes to keep up with consumer demand.Incentives that convinced in making a different decisionThe incentive that led the writer to make a different decision is a discount. If the shoe retailer had a sale that day, and was offering 30% discount, the writer would have bought the $125.00 pair of shoes. The 30% discount would have made the shoes $87.50; which is much more affordable.Economics affect of decision-makingThe principles of economics affects decision making by forcing individuals to think of the opportunity cost associated with certain decisions. The consumer weighs the pros and cons, and benefits and cost of a situation; rather than jumping head first and making decisions based...