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Essay / Research Paper Abstract
This 3-page paper examines the four principles of decision-making (also known as the four principles of individual choice) and provides an example of how these work. Bibliography lists 1 source.
Page Count:
3 pages (~225 words per page)
File: D0_MTdeciecon.rtf
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Unformatted sample text from the term paper:
this social science involves how people make economic decisions. Economics assume that people behave rationally when it comes to allocating their own resources toward acquiring a good or service that
is of greater value. When it comes to decision-making, individuals typically go through four methods, or principles, to make their decisions.
Also known as the four principles of individual choice, these are tradeoffs, opportunity costs, marginal changes and comparison of the costs and benefits (also understood as incentives).
The first principle, tradeoffs, means the individual in question understands that resources are scarce - though this person may want it all, it simply
isnt feasible (Krugman and Wells, 2009). Resources, ranging from time, to endurance, to funds, are not all-encompassing. The basis of economics 101 is that free lunches simply dont exist. They
require some kind of tradeoff. Once the individual understands that he/she cant have it all, then he/she can move on to step
two, the opportunity costs. This means the individual has to give up something to get the thing he/she might want more (Krugman and Wells, 2009).
This far into the scenario, the individual moves on to step three, which is how much the good/service desired is going to cost - in other
words, the cost or benefits of doing a little bit more (or a little bit less) (Krugman and Wells, 2009). This is the idea of marginal changes; whether doing more
is necessary to get to the end result. Finally, the individual will likely want to exploit any opportunity possible to get toward
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