Question

According to the Principles of Economics, economic principles guide how we make economic choices ...

  • According to the Principles of Economics, economic principles guide how we make economic choices and how we interact in the market. What role do economic principles play in your personal economic decisions (choices)? Do you encounter scarcity either personally or in your workplace? What are the kinds of scarcity you encounter?
  • To make rational economic decisions, we need to compare costs and benefits. Suppose you are trying to decide whether to take a vacation. The majority of the costs of the vacation are measured in monetary terms (dollars), but the benefits of the vacation are generally non-monetary in nature. How do you compare the non-monetary benefits with the monetary costs? What are the economic (opportunity) costs of going on vacation? Explain in terms of economic costs, which include both monetary and nonmonetary costs.
0 0
Add a comment Improve this question Transcribed image text
Answer #1

Economic principles play major role when we make personal choices since a rational human being behave in such a manner. For example one of the basic principles is agents respond to incentives. This gets reflected in our own choices since we prefer discounts on price or free goods while purchasing things from market.  

I encounter scarcity both at home and work place infact every place has scarcity of resources since resources are limited. Say for example at workplace I feel the scarcity of labor which puts more pressure on me. Time is a scare resource while working. Similarly at home in the city say Manhattan,  I feel scarcity of space which is because of the high price of land which is again scarce. Also I face scarcity of luxury cars which i can't buy due to scarcity of resources.

Economic costs of a vacation will consider both monetary and non monetary costs. Not only in case of vacation, economic costs always consider both monetary and non monetary costs. Some of the monetary costs of a vacation are the cost of traveling to a place, the cost of staying in a holiday home or hotel. The cost of traveling around the place in the holiday destination. The purchasing of goods in such a place and getting back to home are some of the monetary costs of vacation. Coming to the monetary measures in terms of opportunity cost is the next best alternative that could have been chosen such as staying back and saving the whole expenses and invest it in stocks or saving it in a bank. The opportunity cost is also the interest that is forgone from such saving. The opportunity cost in non monetary terms is the leisure that I could have taken sitting back at home and enjoying the calmness. Thus various dimensions are checked before we do an analysis on economic cost of a subject.

Add a comment
Know the answer?
Add Answer to:
According to the Principles of Economics, economic principles guide how we make economic choices ...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • discussion 1: Economic Principles This Discussion deals with the 12 Principles of Economics. The specific discussion...

    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,...

  • economic principles of trade, choice, opportunity costs, and scarcity, along with the law of demand. What...

    economic principles of trade, choice, opportunity costs, and scarcity, along with the law of demand. What are the potential positive and negative impacts of applying these principles to the healthcare industry? How do you think a healthcare organization should balance the economic principles described with issues of health, life, and death in terms of its policy decisions and strategic planning? Can you put monetary value on a life?

  • 1. Which of the following describes the reason why scarcity exists? A. Governments make bad economic...

    1. Which of the following describes the reason why scarcity exists? A. Governments make bad economic decisions. B. The gap between the rich and the poor is too wide. C. Wants exceed the resources available to satisfy them. D. There is too much unemployment. 2. Which of the following defines economics? Economics is the social science that studies ________. A. the best way of eliminating scarcity B. the choices made to cope with scarcity, how incentives influence those choices, and...

  • The economy works via the interactions of economic agents (interactions of economic choices). Eco...

    The economy works via the interactions of economic agents (interactions of economic choices). Economists claim that pursuing self-interest based on our skills leads to trade based specialization and mutual gains from trade. Think of a recent purchasing decision in which you compared the marginal benefits associated with buying a product with the marginal costs. How do you make a rational decision by comparing marginal benefits and marginal costs? What is the role of self-interest in free market operations (economic choice...

  • 1. think about how scarcity affects the decisions we make as individuals. Please list three goods...

    1. think about how scarcity affects the decisions we make as individuals. Please list three goods that you personally consume on a regular basis. Then, explain the tradeoffs you have to make when you decide how much of these goods to purchase. 2. Next, please describe one positive and negative externality for a common good or activity (does not have to be one of the above). 3. Finally, please write a sentence or two describing one opportunity cost of taking...

  • Which statement is TRUE? O A. The Valuation Principle shows how to make the costs and benefits of a decision compar...

    Which statement is TRUE? O A. The Valuation Principle shows how to make the costs and benefits of a decision comparable so that we can evaluate them properly OB. Financial decisions require that you weigh alternatives in strictly monetary terms OC. The fact that corporations' shares are easily traded within the market has a net effect of acting as a disincentive for managers to favor the interests of shareholders over their o OD. A limited liability company is essentially a...

  • Reading1 Engineering Decision Making: what is the criteria to make decisions? Are there any social and...

    Reading1 Engineering Decision Making: what is the criteria to make decisions? Are there any social and economic considerations when making decision on engineering projects? What is engineering economic analysis? What are costs? What are benefits? How do we estimate costs and benefits? Is there a difference when we estimate a known project vs. a new project? What are the estimating models and what are the difference between them? What are the basic definitions of the following terms: cost, benefit, sunk...

  • 1. Economics can best be defined as the study of how a. Society decides to use...

    1. Economics can best be defined as the study of how a. Society decides to use its scarce resources in an attempt to satisfy unlimited wants b. The government should deal with the problems of unemployment and inflation C. To make money in the stock market d. The government should eliminate the problem of scarce resources 2. What you give up to obtain an item is called your a. True cost b. explicit cost c. opportunity cost d. direct cost...

  • 1)How do the concepts of opportunity costs and marginal thinking, affect the way we make choices....

    1)How do the concepts of opportunity costs and marginal thinking, affect the way we make choices. Give examples. 2)(a) Explain what can we learn from a country's production possibilities curve (ppf)? (b) What can cause the ppf to shift inward or outward?

  • In Chapter 3, we begin to look at how to use data to make decisions. It...

    In Chapter 3, we begin to look at how to use data to make decisions. It is not enough to say, "the answer is $2,100." Rather, what do we do with this information to make good choices? Your assignment for this discussion section is to learn how to use the Expected Monetary Value (EMV) to help you make decisions. Here’s your task: You have been asked to decide whether your company should build a new factory in Alabama. If you...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT