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How People Make Economic Decisions

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How People Make Economic Decisions
ECO 212
April 9, 2012 As the focus of the economy becomes dim, economists are tasked with challenges to seek out optimistic measure that will guarantee a future for society. The focal point centers on the lessons of economics. Economics consist of choices made by consumers, business managers and government officials who attain manage their resources for success. An outline for economic success measures will be discussed through this writing, addressing principles of decision making, comparative cost analysis versus benefits, and incentives for decisions made. Additionally addressed will be the attributes of the economic systems (market, centrally planned and mixed) with affects of economic interactions of the present system.

Exploring the world of economics, three principles are considered. First, people are rational, an assumption developed by economists. The decision of rational people is to weigh the benefits and cost of actions for profit. Second, people respond to economic incentives driven by a variety of motives such as envy, beliefs and compassion. Third, optimal decisions are made at the margin, involving activities up to the point where the benefit equals the cost. As a seasoned veteran of local government employment, continuing my educational pursuit in consideration of my age became a major component in determining my success. A marginal benefit of my decision to continue my education would be to enhance my skills while securing an additional future benefit for retirement. As I weighed the marginal cost of financing my educational goal, it was decided that seeking additional financial assistance inclusive of grants and scholarships to cover my expenses were necessary for me in order for my eminent retirement to be debt free. The marginal or additional benefit of deciding to continue my educational

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