...How People Make Economic Decisions Paper How people make economic decisions regarding their buying’s of good or services at the market are ruled by three basic principles as follows: People are rational as they make the best decision that will benefit each individual on their purchases or selling’s. The people evaluate constantly the benefits versus the cost of the goods or services. Example of this might be: An imaginary famous nail enamel branch was priced originally as .39 cents as the sale manager established. The famous branch was heading to bankrupt then did a marketing study of the market where they establish that the price the people where most likely to pay was .69 cents; this show us that the people associates price with quality. People respond to economic incentives, The basic idea behind the incentive tells that people tend to move towards a decision that they didn’t considered before if at the time they will receive any monetary incentive for it. As an example the author show us how Estonia woman start having babies after the government decide to provide incentive for each child birth to the mother for a couple of months with the goal of rise the born and death rate in this country that still critical. Finally the Optima decision is made at the margin where the benefits are maximize, where the seller obtain the maximum return possible for what the buyers are willing to pay for a good or service. The best example to show the application of the marginal benefits...
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...How People Make Economic Decisions Francisca A. Castellanos ECO212 January 18, 2011 Evanthis (Pete) Mavrokordatos How People Make Economic Decisions Decisions, decisions, decisions…Decisions are the worst, and yet we must make them each and every day. The ten principles of economics explains how people make decisions, how people interact, and how the economy as a whole works. Economics is a behavioral science, which studies how societies manage their scarce resources (Hubbard-O’Brien, Glossary). Societies have different economic interactions that are affected by the type of economic system present. The main attributes of each system are as follows. In a market economy decisions of households and firms interacting in markets allocate economic resources (Glossary). In a centrally-planned economy the government decides how economic resources will be allocated (Glossary) and in a mixed economy economic decisions result from the interaction of buyers and sellers in markets but the government plays a significant role in the allocation of resources (Glossary). My small society (household) depends on me to allocate our scarce resources (monetarily), taking into account our abilities, efforts, and desires. My husband makes decisions based on our emotional needs as a family, yet both parts are equally important. How People Make Decisions Principle One: People face trade-offs. Making decisions requires trading off one item for another. I face this dilemma all the time because...
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...How People Make Economic Decisions Paper Gary Brockington ECO/212 7-25-2010 Anil Marthur How People Make Economic Decisions Paper People make economic decisions every day throughout their lives. In this paper I will describe the three economic principles of individual decision-making. I will provide an example of a decision which I took part in and compared the marginal benefits against the marginal costs. I will also give those marginal benefits and costs acquainted with that decision. I will tell which incentives could have led me into making a different decision. Last I will explain how the principles of economics affect people’s decisions, interaction, and how the economy works as a whole. There are three economic ideas concerning people who have to make economic decisions. One is people are rational. This means that an individual always weighs the benefits and costs, and make their decisions only if the benefits outweighs the costs (Hubbard, O’Brian, 2010). The second economic idea is people always respond to economic incentives. This simply means that people respond to incentives from variety of motives (Hubbard, O’Brian, 2010). The third idea is that optimal decisions are made at the margin. This means that when he or she is making a decision in which they are going to hit the jackpot or lose everything. There have been many cases in which I had to look at the marginal costs and the marginal benefits. The biggest decision I had to make was whether I was...
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...How People Make Economic Decisions People select different alternatives in order to achieve their objectives. They choose one way or another because of scarce resources. This means that individuals may have lots of wants or needs, but they are limited by the available resources; be them money, time or several other. In this paper I will list three economic ideas associated to individual choices, present two cases of decision-making in which I shall compare the marginal benefits and the marginal costs related with the decision, show what incentives could guide to take a different path, and explain how the principles of economics affect decision-making, interaction, and the gear of the economy as an overall. Individual Decisions R. Glenn Hubbard and Anthony Patrick O’Brien (2010) teaches that “economics is the study of the choices consumers, business managers, and government officials make to attain their goals, given their scarce resources” (pg.4, para 3). Previous citation can translate as: I have only an hour time and I need to choose if to finish my economics paper, or watch my favorite show. Another individual decision example may be when a business has to decide if to produce 5,000 more electric batteries for cars, in the middle of the year, or to stay with the 50,000 production number that was the first decision in the beginning of the year. There are three main economic ideas related to individual choices: “people are rational, people respond to incentives, and optimal...
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...How 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 economic decisions, and the three major types of economic systems. The main principle of individual decision making is utility. Utility is the enjoyment or satisfaction people receive from consuming goods and services. Another important factor is budget constraint, which is defined as the limited amount of income available to consumers to spend on goods and services. Social influences also has an effect on an individual’s decision making as Hubbard and O’Brien state, “Sociologist and anthropologists have argued that social factors such as culture, customs, and religion are very important in explain the choices consumers make” (Hubbard & O’Brien, 2010, pp. 3-31). A recent example of a decision in which one compared the marginal benefits and the marginal costs was a choice between spending money to go to a concert or to save money for a trip to Boston. The option of going to the concert would put an individual’s funds back approximately $70. The individual would have to postpone...
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...cs How People Make Economic Decisions Paper University of Phoenix Eco 212 May 29, 2011 Economics plays a role in every person’s day-to-day life. One aspect that it plays apart in is decision making. For every decision that is made economics is applied. There are principles that relate to decision making. First is that for every decision made there are tradeoffs, to get one thing something else is given up. The next principle is for every decision made there is a cost. The cost is what was given up. The third principle is people think rationally and rational people think on the margin, meaning that the decision is not made unless the marginal benefit exceeds the marginal cost. The final principle is that people respond to incentives. Behavior changes when cost or benefits change. These principles explain how the economy functions as a whole. Since resources are scarce people have to make decisions based on benefiting themselves on how to spend their time and money. To make rational decisions people must interact with the environment and other decision makers. These interactions lead to the best allocation of resources. When people interact with one another they make trade for resources when the benefit is mutual. For example buying a soda the buyer is thirsty and enjoys soda so he or she will benefit from the soda, and the vender will benefit from the money for the soda so the trade has been made. These interactions are affected by the economy system present. In a...
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...How People Make Economic Decisions Paper Agnes Pierre Louis ECO/212 October 5, 2010 Nick Bergan How People Make Economic Decisions Paper The decision we make everyday always comes with some kind of risk. By making these decisions on a daily basis we have to realize that they are four major principles in the economic world. These four major principles are: (1.) never risk more than you can afford to give; this is when you can offer to give your time, energy, and work under your terms. For example; you should take only a job that will require a lot of research if you are willing to be a good reader and listener. (2.) Never risk more than you have; this is when you become limited in what you can do. For example; you need to know how much you have and never lessen your resources. (3.) Never risk than you can get in return. For example; make sure the risk you take always have gain for you. (4) Follow your intuition. Finally, when making those decisions firmly knows that you are committed to trust and go by that decision you chose because it was a good decision to open up future possibilities. The example the decision in which I compared the marginal benefits and the cost associated with that decision was that I had a client where I charged him/her a price of my consulting service. I explained into details the types of service I offer, however; they wanted more than what my service offered. These services they wanted were in jurisdiction but I couldn’t...
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...certify that I am the author of this paper and that any assistance I received in its preparation is full acknowledged and disclosed in the paper. I have also cited any sources from which I used data, ideas or words, either quoted directly or paraphrased. I have added quotes whenever I used more than three consecutive words from another writer. I also certify that this paper was prepared by me specifically for this course. Student’s Signature: Khanya Clark-Robinson Khanya Clark-Robinson Final Paper Kahneman1, Daniel and Tversky, Amos. (1979). “Prospect Theory: An Analysis of Decision under Risk.” 1. Big Question The big question of this article is how people make decisions under uncertainty of risks and rewards. Decisions under risks assume that a decision can be quantified as a positive or negative outcome with quantifiable probability. This theory was developed for monetary decisions and the process observations can be included in other fields; fields such as social sciences and policy making. 2. Background Information The standard for analyzing decisions was the theory that quantified the outcome and probability. A reasonable individual will choose the option with the best utility. The probability results should all add up to 100%. The utility theory has a defined logical foundation and it represents a behavior with uncertainty and a variety of decisions. At this time it is the approved method that evaluated decisions in science. Although it is utilized...
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...Environmental Factors Paper University of Phoenix Christy Holley Environmental Factors for PepsiCo PepsiCo, one of the leading beverage and snack companies in the United States and abroad, is affected by both global and domestic environmental factors. These factors, along with changes in technology, all impact and shape the organization and affect marketing decisions. The article “PepsiCo Pops for China,” written by Ruthie Ackerman and published by Forbes.com, reviews Pepsi’s decision to invest billions into the Chinese market audience. This paper will review the article, identify environmental factors that shape the organization and impact marketing decisions, and discuss how technology plays a role in those decisions. Alternatives to Ackerman’s view of social responsibility to the company’s marketing decisions and activities will be analyzed, along with explanations of how ethical issues can make an impact. The accuracy of the article’s forecasts will be reviewed and further supportive references to conclusions made will be gathered, if necessary. Global and Domestic Factors Several macro-environmental factors shape the PepsiCo Corporation and impact marketing decisions. Demographics, economic climate, ecological and political issues, technology, and cultural concerns all affect where the company is headed desires and the decisions the company makes. Each issue affects the company differently, but when combined together, the environmental factors can wreak havoc...
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...Terms Comparison Paper HCS 552 May 25, 2015 Terms Comparison Paper According to the American Economic Association (2011) economics studies how people make choices when they want to utilize resources. This fundamental process links economics and health care together because health care professionals use economic principles in their everyday professional behaviors. Health care organizations do their best to use the same concept of economics when they decided how to allocate resources and plan how to use them because it is essential to their survival. Therefore, health care and economics are connected in the sense of sharing the same terms such as resources, quality, and cost. The objective of this paper is to analyze how the terms of cost, quality and resources are similar and yet dissimilar in healthcare and economics. Resource The term resource is defined as the product, asset, or other service with limited availability utilized to generate commodities and services that convene to human requirements and desires (Gretzen, 2007). As a result of these resources can be restricted, many economists, decision makers, and health care providers are forced to find ways to efficiently allocate resources within their organization in order to maximize cost effectiveness. Economic resources are also found to have a substantial and considerable effect on the utilization of medical care (Chung, 2006). Healthcare services are provided to consumers by the utilization of resources...
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...HCS/552 Health Care Economics Terms Comparison Paper Abdel Rahman Shehabeddin Instructor Nate Garner Monday, August 28 2011 Terms Comparison Paper Economics is the study of how people make choices when they want to utilize resources (American Economic Association, 2011). Health care organizations strive to use the same concept of economics when they choose how to allocate resources and plan how to use them because it is essential to their survival. Therefore, health care and economics are connected in the sense of sharing the same terms such as resources, quality, and cost. This paper analyzes how the terms resources, quality, and cost are similar in economics and health care, and how these terms differ in economics and health care. Terms In economics a resource is defined as a product, asset, or other services with limited availability utilized to generate commodities and services that convene to human requirements and desires. Every economy has, in varying degrees, vast amounts of diverse resources, or factors of production. Factors of production can be classified in many ways. One common classification design distinguishes human resources, natural resources, and manufactured resources (Henry George Institute, 2011). Human resources or labor is the quality and quantity of human effort directed toward producing goods and services ("Human resources," 2006). Natural resources such as land with its innate mineral deposits that is accessible without any human effort or...
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...Instructor: Anissa Upshaw Utilizing Online Social Networking Sites Paper The subjects in this paper will revolve around Apple Inc the corporation. Apple Inc has been in business for several years, and has expanded their business from domestic to global in just a few months. The company sells to countries all around the world and their products are well known in many countries. The first subject will cover information on environmental factors that affect global and domestic marketing decisions. The second subject will analyze the influence of global economic interdependence also the effect of trade practices and agreements. The third subject will cover the importance of demographics and physical infrastructure; also this section will analyze the influence of cultural differences. The fourth subject will cover the importance of social responsibility and ethics versus legal obligations. The fifth subject will analyze the effect of political systems and the influence of international relations; also the Foreign Corrupt Practices Act of 1977 will be analyzed, also the influence of local, national, and international legislation will be analyzed. The final subject will cover the effect of technology. Environmental Factors Every company has environmental factors that affect their global and domestic decision making. The Apple store has three environmental factors that affect their global and domestic decision making. The first environmental factor is technological, the second...
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...Terms Comparison Paper HCS 552 June 9, 2013 Terms Comparison Paper Economics is the study of how people make choices when they want to utilize resources (American Economic Association, 2011). Thus, this fundamental process links economics and health care, as health care professionals use economic principles in their everyday professional behaviors. Health care organizations strive to use the same concept of economics when they choose how to allocate resources and plan how to use them because it is essential to their survival. Therefore, health care and economics are connected in the sense of sharing the same terms such as resources, quality, and cost. The objective of this paper is twofold – to analyze how the terms of cost, quality and resources are similar and yet dissimilar in healthcare and economics. Terms Resource is defined economically as a product, asset, or other service with limited availability utilized to generate commodities and services that convene to human requirements and desires (Gretzen, 2007). Because these types of resources are relatively scarce and limited, economists, decision makers, and health care providers must all find a way to allocate resources efficiently and in a cost effective manner. Economic resources are also found to have a substantial and considerable effect on the utilization of medical care (Chung, 2006). Healthcare services are provided to consumers by the utilization of resources such as personnel or work force (i.e., Nurses...
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... | | |ECO/212 (3 Credits) Version 6 | | |Principles of Economics | | |03/01/2012 - 03/29/2012 | | |PUERTO RICO CAMPUS | Copyright © 2009, 2008, 2006, 2004 by University of Phoenix. All rights reserved. Course Description This course introduces the fundamental theories of microeconomics and macroeconomics. The economic principles studied in this course apply to everyday life as students research an industry, debate issues with trade agreements, discuss the effects of a shift in labor supply and demand, and discuss the strengths and weaknesses of the Consumer Price Index calculation. In particular, students research an industry affected by the economy and perform an economic analysis of the chosen industry. Policies Faculty and students/learners will be held responsible for understanding and adhering to all policies contained within the following two documents: University policies: You must be logged into the student website to view this document...
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...opportunities is not the only ingredient needed to make sharp predictions. The level of irrationality need to be specified by behavior finance researchers. This is related to how they deviate from the Subjective Expected Utility theory. In order to specify the type of irrationality, researchers have turned to experimental evidence complied by cognitive psychologists on the biases that arise when people form beliefs, and on the people’s preferences, given their beliefs or on how they make decisions, Thaler and Barberis (2002). In this paper, we will concentrate on the extensive literature on the Limits to Arbitrage and explain how the theory was conceived, how it evolved over time and apply a scenario to better explain the research. Limits to Arbitrage Understanding arbitrage opportunities is not the only ingredient needed to make sharp predictions. The level of irrationality need to be specified by behavior finance researchers.This is related to how they deviate from the Subjective Expected Utility theory. In order to specify the type of irrationality, researchers have turned to experimental evidence complied by cognitive psychologists on the biases that arise when people form beliefs, and on the people’s preferences, given their beliefs or on how they make decisions, Thaler and Barberis (2002). In this paper, we will concentrate on the extensive literature on the Limits to Arbitrage and explain how the theory was conceived, how it evolved over time and apply a scenario to better...
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