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 and marginal cost associated with at the decision could be the buying of a car, where the individual find some offers from used car that are inexpensive but at the same time the car is used and contains no insurance about the operation versus the selection of a new car that this person will need to pay for six years getting sure if something goes wrong there will be an assurance to fix it.