The first principle of economics people face trade offs when we making decisions requires trading off one goal against another. The second principle is the cost of something is what you give up to get it. Rational people purposefully do the best they can to achieve their objectives. The fourth principle is people respond to incentives. Because rational people make decisions by comparing cost and benefit they respond to incentives. A few months ago when I was deciding wether I wanted to go back to school I compare the marginal cost and the marginal benefit. I determine the benefit of going back to school and obtaining my bachelors degree would be better job opportunity better paying jobs and most important I would be a better role model for my children. These benefits out weight the marginal cost that is financial and time that I would have to allocate to school.
I believe the incentive that would of kept me away from going back to school would of been a multimillion dollar job offer, or the need to spend more time with my children, then the opportunity cost of going to school would of been to high. I figure that this was the right time for me to go back to school because my children are older and don’t need me as much as when they were smaller. I want to show them that is possible to accomplish anything they set their minds to do, and it’s never to late to accomplish the goals that you set in life.
The principles of economic affect decision making people face trade-offs among alternative goals and people change their behavior in response to the incentives they face. Trade can be mutually beneficial and government can potentially improve markets outcomes if there is some market failures. The economy as a whole are that productivity is the ultimate source of living standards and that society faces a short-run trade-off between inflation and unemployment.
In conclusion when we make economic decision we have to give up something to receive another we...