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How People Make Economic Decisions Paper

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How People Make Economic Decisions Paper
“The word economy comes from the Greek word oikonomos, which means, one who manages a household.”(2007, Chapter 1) I have been married for three years now and I never know before then how much time and energy it takes to run a house. Someone needs to make sure that the rent is paid on time, there is cash available incase of in emergency. After my wife and got mired we had to set down and talk about our finances and our notes. For example, my wife had purchased new cars before we got married. If she would to lose her job I would be the person responsible on making the payments. A lot of decisions needed to be made in order for our household economy would be able to function.
The four principles of individual decision-making are.
1. People Face Trade-offs – This means that there is no such thing is getting anything for free. In order to get something that we like, we typically have to give up something in return. When fast food restaurant offer a promotion for a free breakfast between the hours of 6 am and 10 am what we give up for that five-dollar breakfast is waking up earlier for work, waiting in line at the restaurant and if there are other 100 people that think the same we will be waiting for a long time.
2. The cost of something is what you give up to get - “Because people face trade-offs, making decisions requires comparing the cost and benefits of alternative courses of action.” (2007, Chapter 1) For example, if a collage athlete’s dream is to become a pro in his or her sport they need to perform at a high level, so the recruiters or sponsor will take notices and hire them. They spent a lot of time working out and training. If the athletes would get heart and cannot recover, the time that they spent they could have taken other class or graduated earlier.
3. Rational people think at the margin – “People who…...

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