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How Peole Make Economic Decisions

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Submitted By mendozasr
Words 532
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How People Make Economic Decisions
ECO/212
October 21, 2013

How People Make Economic Decisions
The principles of individual decision-making are a set of concepts that broken in to four parts. These principles help us to understand some of the motivational factors which will help us understand the way consumers interact with other consumers in the market and to make strategic business decisions. The four principles are: "people face trade-offs," "the cost of something is what you give up to get it," "rational people think at the margin" and "people respond to incentives." In my line of work, I have to make decisions based on what is best for the customer and me because the more products I sell, the more money I make. I had a choice to place a 250 case display but I had to decide which specific size to put, either 24/12 or 24/10. I would make more money on the 24/12, but the store sells more 24/10. Instead of being greedy for the one time buy in, I decided that volume would be more important for me and the customer so I would continue to resell the display with the 24/10. The benefit with these decisions is that sometime the customer would run out of the product just with regular back stock, and now they can handle more volume and will less likely run out of inventory with the display in hopes to sell more products. The incentives that could have made me make a different decision is that if I could have sold more 24/12 I would put those on display simply because I would make more money and the customer would have a higher ring up at the register. So there far I benefit either way because I was able to go massive with my brand of products on display.

The principle of economics relates to a lot of economic decisions that can better the country if it is done properly. For example trade can make everyone better so that people can buy different types of goods

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