How People Make Economic Decisions

The individuals have to make decisions all the time and there is always something to take some time to make sure that the choice will benefit the individual. The same individual has to decide if the decision will cause a monetary burden. Principles of individual decision-making are people make tradeoffs, when people choose one thing they give up something else, rational people think at the margin, and people respond to incentive. People make tradeoffs express by what would choose between items the one that best meets their requirements (Mankiw, 2011).

Margin thinking by rational people consists of making a decision is just over the acceptable choice. Possibilities are that individuals are motivated to a decision by monetary profits (Fox, 2010). In 2005, I had to make a decision about staying at Indiana Department of Environmental Management (IDEM) or seek another job. I had a problem with the supervisor of the department. The benefit at IDEM was adequate health insurance, sick leave, earned vacation time, and days for funerals (immediate family). This was a hard decision because of the need to rationalize the change.

In regard to the marginal cost and benefit because there needed to a stressful transfer from the old job to a new job. I believed that the marginal cost was not an issue because money was not a concern. The marginal benefit was to do have a job that made me happy and relaxed. The principles of economics affect decision-making individuals to evaluate purchases, where to live, what to do with their lives, what to do with their lives, where to work and how many children to have, any other decision that needs to make.

All companies have to decide on good to purchase, project the deficient and profits, make sure that they have employed sufficient staff to produce a product or to provide a service, and to having sufficient vendors to meet the needs of the company. The principles of economy do interact with all lives always by every decision that was thought about and every choice made.

References

Encyclopedia of Cognitive Science. (2005). Decision-making. Retrieved from http://www. credoreference. com/entry/wileycs/decision-making Fox, J. (2011, October 19). Economists respond to incentives. Retrieved from http://www. blogs. reuters. com/justinfox/2011/10/19/economists-respond-to-incentives Hubbard, R. G. , & O’Brian, A. P. (2010, 2009, 2008, 2006). Economics (3rd Ed. ). Boston, MA: Pearson Education. None listed. (2011). Not titled. Retrieved from http://www. investopial. com/study-guide