Question

discussion 1:

Economic Principles

This Discussion deals with the 12 Principles of Economics. The specific discussion areas include the economic principles that guide how people make economic decisions (choices), how people interact in markets, and how the economy as a whole works.

Read Chapter 1 to identify particular economic principles that guide the various economic decision making processes. Remember to include your references or links to the websites that are important contributors to your comments.

Economic agents are those individuals, firms, and government officials that make decisions that affect the economy.

1. Why do economic agents need to make choices in the decision making process? What are the factors that force us to make choices among the viable alternatives at our disposal during a given period of time?
2. Why do economic agents face tradeoff in our economic choices (economic decision making) process? How do we make a rational choice among the viable alternatives we have as individuals or business owners?

discussion 2:

Supply, Demand, and Government Interventions in Markets

This Discussion topic includes the market forces of supply and demand, supply and demand model, and supply and demand curves.

Read Chapters 3 and 4, and remember to include references and links to the websites that you feel are important contributors to your posts (comments).

Supply and demand is the foundation of the market economy and the basis of the study of economics.

1. Why supply and demand is considered as factors that make market economies work? Why supply and demand drives the market economy? Provide an example of the role of supply and demand in business decision making.
2. What is the difference between a movement along and a shift of the demand and supply curves? What are the factors that lead to shifts in supply and demand curves?

Answer 1

Discussion I Why do economic agents need to make choices in the decision making process? What are the factors that force us to make choices among the viable alternatives at our disposal during a given period of time? In any society, resources are limited in nature and this is referred to as scarcity of resources. Due to the scarcity of resources society cannot produce all the goods and services. Similarly, each consumers cannot afford any everything they want due to the limitation of income available for consumption. Therefore economic agents have to make choices. In short, scarcity is the main reason for the need to make choices in decision making process There are various factors that force economic agents to make choices. These factors include, the cost of actions, benefits derived from the action, personal tastes and preferences, expectations regarding future changes etc Why do economic agents face tradeoff in our economic choices (economic decision making) process? How do we make a rational choice among the viable alternatives we have as individuals or business owners? Due to the existence of scarcity of resources and time, economic agents have to make choices in a decision making process. In order to make decisions, trading off one available alternative against other is required. In other words, one cannot have all of the alternatives available together. In order to get one thing, we have to give up another one. Or, the resources have to be divided between different alternatives or choices and this gives rise to trade-offs Rational economic agents make decisions by comparing the marginal cost incurred and the marginal benefits derived from a choice. More clearly, a rational economic agent takes an action only if the marginal benefit derived from it exceeds the marginal cost incurred