Economic Thinking

In: Business and Management

Submitted By ducati1919
Words 621
Pages 3
Economic Thinking

1. Suggest how an economist would approach the problem of alcohol abuse. Provide two (2) possible solutions to this problem. Include the four (4) elements of the economic way of thinking in your analysis. The key questions an economist would use to approach a problem would be what, how and who. Alcohol is the product. According to the National Institute on Alcohol abuse and Consumption, the highest consumers of alcohol are people from sixteen to thirty five. With this info an economist now assumes the targeted audience. Now they can look at the going price of alcohol and the amount of alcohol consumed. Economists also consider how a small change in one variable will affect another variable and what that affect has on a person’s decision making. For instance what this means is that if taxes on alcohol were increased significantly, it could possibly change the demand for the product. With increased pricing, younger adults might be deterred from purchasing alcohol.

2. Analyze how prescription drugs affect the demand and supply of other products and services in this country. Prescription drugs are in high demand for people of all ages. According to Kaiseredu.org over 90% of elderly people use prescription medication. One product that it has had an effect on would be cigarettes. Because smoking has been proven to cause many diseases and is highly addictive, medication has been created to assist people to kick the habit. Therefore the demand for cigarettes has decreased significantly. 3. Formulate a reason why the elasticity of demand is an important consideration when analyzing the impact of a shift in supply and why the elasticity of supply is an important consideration when analyzing the impact of a shift in demand. Include at least one (1) example in each scenario. The price elasticity of demand measures the…...

Similar Documents

Economic

...Economic Decisions Individuals and societies alike face many decisions. Individuals tend to make economic decisions when faced with trade-offs, and because of that, individuals are required to compare costs and benefits of their alternative actions referred to as the opportunity cost. Rational individuals tend to think of marginal change during the process of decision-making, and therefore, may respond differently to incentives whilst making economic decisions. This paper discusses the four principles of economics, a decision associated with marginal change, the incentive(s) that could lead to making different decision, and finally, how the principles of economics affect decision-making, interaction and the workings of the economy as whole. The Principles of Economics A trade-off is often referred to as the “technique of reducing or forgoing one or more desirable outcomes in exchange for increasing or obtaining other desirable outcomes to maximize the total return or effectiveness under given circumstances.” (BusinessDictionary.com, 2009) In brief, individuals choose something over something else, or give up something in order to get something else. Whatever “it” is that individuals sacrifice in order to get something, is generally “its” cost, and cost is often linked and associated with money, an opportunity cost however, could be the cost of anything i.e. time or health sacrificed in order to get something. Marginal changes are incremental adjustments individuals make...

Words: 853 - Pages: 4

Economic

...Getzen & Allen – Health Care Economics Multiple-Choice & True/False 30 Multiple-Choice and True/False questions. Please highlight the correct answer. Once completed submit it as an attachment to the Assignment Link: 1. The insight that both parties must be benefiting if they freely agreed to make a trade is known as the fundamental theorem of exchange. True or False? 2. In a two-party transaction, consumers make up the demand side, while sellers make up the supply side. True or False? 3. A recent study showed that 86% of those who filed for bankruptcy had health insurance. True or False? 4. Demand is a professional determination of the quantity that should be supplied. True or False? 5. To determine how many times an individual will visit the doctor, we look only at that individual’s behavior. This is an example of derived demand. True or False? 6. Cost–benefit analysis (CBA) is a set of techniques for assisting in the making of decisions that translates all relevant concerns into market (dollar) terms. True or False? 7. The appropriate measure of economic cost is opportunity cost. True or False? 8. How much has to be paid for treatment, and how much the treatment is worth, depends on whose perspective a cost–benefit analysis of health care is taking. True or False? 9. The chance that you might become injured or sick is a cost, as is the chance that you might have significant expenses when you have no income. True or False? 10. People’s degree of risk aversion depends to......

Words: 815 - Pages: 4

Thinking

...Thinking, Man’s Greatest Power It is common knowledge that humans and chimpanzees are closely related. In fact, 95% of their DNA sequence is in common. But what separates a man from a chimpanzee? The blurred line that borders the two is ‘thinking’. Thinking is what makes a man. Thinking is man’s greatest power. And thinking can lead a man to its gradual completion or utter destruction. Adolf Hitler is a man of reason, as he was the Chancellor of Germany from 1933 to 1945. He was also the leader of now infamous, Nazi Party. Under his domain, he ordered the killing of the six million innocent Jews because of his ideology concept of racial hygiene. He ‘reasoned’ that the Aryan race is the so-called ‘pure race’, and the only race that should proliferate around the world. And his hubris and ideology led to his imminent downfall and demise, with six million innocent people in tow. Clearly, ‘thinking’ is man’s greatest power, but with great power comes great responsibility. If one lets it to rampant on its own, thinking is man’s utter destruction. On a lighter note, thinking may well be the cause of man’s gradual completion, in terms of spirit and science. Take for example the early philosophers – like Aristotle. Aristotle is the man who thought about the differentiation between a use value and an exchange value, which was the rudimentary form of economy. Without his thinking, there may not be an economy today. Men like Mahatma Gandhi prove that thinking is a power......

Words: 343 - Pages: 2

Economic Thinking to Government Spending and Taxation

...guideposts of economic thinking to government spending and taxation Well from reading this week reading, the economic way of thinking requires more than just making decisions on plain information. For it requires government incorporating certain guidelines such as the building blocks of basic economic theory into their thought process when making decisions. There are eight principles that characterize the economic way of thinking; however, I will only identify four. According to the textbook” “One of the first guidelines is referred to as the use of scare resources is costly, so decision-makers must make trade-offs. Economists sometimes refer to this as the “there is no such thing as a free lunch” principle, it is important to recognize that the use of scarce resources to produce a good is always costly” (Gwartney et.al, 2013). In economics, the opportunity cost of an action is the highest valued option that is given up when choices are made in economic thinking. 2. When government make decisions, they should make decisions on the margin of how much it is going to cost and which option seems like the most economical way. “When making a choice between two alternatives, individuals generally focus on the difference in the cost and benefits between alternatives. Economists describe this process as marginal decision-making, or thinking in such cases” (Gwartney et al, 2013). 3. Having information on the economic factor that helps government make better decisions in......

Words: 377 - Pages: 2

Economics

...Economics is a way of thinking about issues which helps us to: • Understand the economic environment in which management, social, and individual decisions must be made. • Understand the justifications for, and likely effects of, Government economic policy • Uses economic principles to make “rational” decisions What is “Economics”? • “The study of how people make choices under conditions of scarcity and of the results of those choices for society” Unlimited wants plus scarce resources • Choices involve making decisions between competing interests (what, how, for whom), • The choice involves looking at the Costs and the Benefits involved in the decision • Measuring the Costs and the Benefits accurately is crucial to the role of economics The scarcity principle (the ‘no free lunch’ principle): • Although we have boundless needs and wants, the resources available to us are limited. Consequently, having more of one good thing usually means having less of another. Microeconomics • The study of individual consumer, firm and market behaviour Macroeconomics • The study of the aggregate economy Economic decision • Any decision where securing something of value means going without some other thing of value The cost–benefit principle • Economists choose among competing interests by using cost–benefit analysis • An individual (or a firm or a society) should take an action if, and only if, the extra benefits from taking the action are at least as great as the extra......

Words: 253 - Pages: 2

Economics

...Unlearning Deficit Ideology and the Scornful Gaze: Thoughts on Authenticating the Class Discourse in Education Paul C. Gorski Founder, EdChange Assistant Professor, Integrative Studies George Mason University http://www.EdChange.org gorski@EdChange.org December 2010 Unlearning Deficit Ideology and the Scornful Gaze 2 It is popular in the education milieu today to talk about the dangers of assuming a deficit perspective, approaching students based upon our perceptions of their weaknesses rather than their strengths. Such a perspective deteriorates expectations for students and weakens educators’ abilities to recognize giftedness in its various forms (Ford & Grantham, 2003). The most devastating brand of this sort of deficit thinking emerges when we mistake difference—particularly difference from ourselves— for deficit. If one concentrates best while sitting still it may be difficult to imagine that somebody else—a student or colleague, perhaps—concentrates more effectively while pacing or tapping a pencil. Similarly, if one always has lived among people who speak a certain language variation, such as what people commonly refer to as “standard English,” she or he might mistake somebody’s use of a different variation, such as the Appalachian variety spoken by my grandmother, as an indication of intellectual inferiority or, worse, deviance (Collins, 1988). Over the past ten or so years a critical discourse challenging the deficit perspective has emerged among educators....

Words: 9486 - Pages: 38

Economic Way of Thinking

...Economic Way of Thinking Economic Way of Thinking SW Economics 100 Professor E 11-06-2012 Abstract In this paper, I am going to review an economist approach to alcohol abuse and include the 4 elements of the economic way of thinking. I will be discussing supply and demand and how it affects prescription drugs and also how it is an important. I will be discussing increasing-cost industries as well as reviewing a perfectively competitive market. Impact of Economics An economics perspective of alcohol abuse would be that, even with significant harm is caused; they feel it should not be restricted. Economics assume that people, usually, are the best judges of themselves. Economist have also come to the conclusion that consumers tend to drink less alcohol, and have fewer alcohol-related problems, when alcoholic beverage prices are increased or alcohol availability is restricted. A possible solution to the alcohol abuse problem could be limiting which stores are able to sell the alcohol products. It is very easy to obtain alcohol and if it was not as easy to access, the sales would go down, causing the number of alcoholics to decrease. Another possible solution to alcohol abuse could be to enforce tougher penalties for alcohol related crimes and or alcohol related traffic violations. By doing this, the consumer......

Words: 728 - Pages: 3

Thinking

...The topic of thinking can be profound one, including many voluntary and involuntary procedures. These include the sense of a problem, the observation of given conditions, the formation and rational elaboration of a suggested conclusion, and the active experimental testing (Pg. 151). Thinking is very significant because it allows us to analyze, evaluate, explain, and restructure certain situations, which ideally decreases the risk of acting on, or thinking with, false ideas. Many times a thinker, even after carrying out these steps, can make mistakes due to a thinker incorrectly extending ones own belief system beyond its reasonable limits or failure to know all of the facts. Critical thinking is based on concepts and principles. Of course, thinking does not always assure that one will reach either the truth or correct conclusions. As Dewey states, thinking always involves a risk. Certainty cannot be guaranteed in advance (Pg. 148). First, one may not have all the relevant information needed. Important information may remain undiscovered, or the information may not be obvious at first. Also, many mistakes from the thinker may come into plays such as unjustified assumptions, use of inappropriate concepts, failure to notice important hints, or the use a biased or unfair point of view. One may also be corrupt with closed-mindedness. An individual’s misguided thinking may also be, inaccurate, imprecise, irrelevant, narrow, illogical, or trivial. He or she could also think on a......

Words: 260 - Pages: 2

Economics

...Question 2 Refer to Q1.2 Chapter 1 (Page 78). What is scarcity? Why is scarcity central to the study of economics? Question 3 Refer to Q1.10 Chapter 1 (Page 79). In a paper written by Bentley College economists Patricia M. Flynn and Micheal A. Quinn, the authros state: “We find evidence that Economics is a good choice of major for those aspiring to become a CEO (Chief Executive Officer). When adjusting for size of the pool of graduates, those with undergraduate degrees in Economics are shown to have had a greater likelihood of becoming and S&P 500 CEO than any other major.” A list of famous Economics majors published by Marletta College inculdes business leaders Warren Buffet, Donald Trump, Ted Turner, Diane von Furstenberg, and Sam Walton, as well as former Presidents George H.W. Bush, Gerald Ford and Ronald Reagan. Why might studying economics be particularly good preparation for being that top manager of a corporation or a leader in government? Based on Patricia M. Flynn and Michael A. Quinn. “Economics: A Good Choice of Majorfor Future CEOs,” Social Science Research Network, November 28, 2006, and Famous Economics Majors, Marletta College, Marletta, Ohio, May 2, 2010. Question 4 For the sake of argument, let’s assume that you would never cheat. Under what circumstances are students in general more or less likely to cheat on an economics examination? Question 5 Refer to Q1.6 of Chapter 1 (Page 78). Jay Bhattacharya and M. Kate Bundorf......

Words: 703 - Pages: 3

Economics

...Definitions: Alfred Marshall - "a study of mankind in the ordinary business of life" Milton Friedman - "is the science of how a particular society solves its economic problems." Lionel Robbins - "the science which studies human behavior as a relationship between ends and scarce means which have alternative uses." David Simon - Economics is a social science that attempts to use the scarce resources to attain a maximum fulfillment of mans' unlimited wants. Scarcity: All economic questions arise from a single and inescapable fact: you can't always get what you want. (We live in a world of scarcity) Scarcity is define to mean- wants always exceed the resources available to satisfy them. Wants do not simply exceed resources, they are unlimited. Scarcity is a relative concept as opposed to an absolute concept. 1) Good: Anything that gives one utility or happiness or pleasure or satisfaction. 2) Bad: Anything that gives one disutility or unhappiness or displeasure or dissatisfaction. Free good vs. Economic goods Choice: Scarcity implies choice (scarcity → choices): Choice is the act of selecting among restricted alternatives. Optimization vs. economization OPPORTUNITY COST: Choices imply opportunities (choices → opportunity cost) Can one make a choice without incurring a cost? The answer is NO. Choice naturally implies cost and because scarcity implies choice, we conclude that scarcity indirectly implies cost. Thus the concepts......

Words: 343 - Pages: 2

The Thinking

...Dimensions of Critical Thinking Critical thinking is a process in our human mind. Each and every day human beings must do this whether consciously or unconsciously. A critical thinker process that I became well aware of that; I thought was just regular thinking was simply preparing dinner meals. I just simply looked at its’ association with natural living. Some insights that I gained from this exercise is that when using the critical thinking process you either make assumptions, be biased and or analyze the situations. Assumptions can be detrimental to someone’s character. Sometimes we as human beings don’t take into account all the hard evidence before making final decisions. We take a lead and go all the way and fill in our own blanks. The exercise has taught me that every situation, sentence, and statement needs to be evaluated thoroughly. We live in such a microwave society that we don’t want to take the extra time; we are always rushing and not taking the millisecond to make the right choice or make the right decision. When we are challenged about our decision then we re-evaluate the scenario and find the facts or make accusations whether justifiable or inconsistent. At some time or another we also can be very bias in our daily conversations. Sometimes we are not persuaded to change our thinking even when the evidence clearly states the truth. A critical thinker will always have a plan and analyze the evidence in hand. Critical thinking added to a......

Words: 290 - Pages: 2

Thinking

...How many words does it take to know you’re talking to an adult? In “Peter Pan,” J. M. Barrie needed just five: “Do you believe in fairies?” Such belief requires magical thinking. Children suspend disbelief. They trust that events happen with no physical explanation, and they equate an image of something with its existence. Magical thinking was Peter Pan’s key to eternal youth. The ghouls and goblins that will haunt All Hallows’ Eve on Friday also require people to take a leap of faith. Zombies wreak terror because children believe that the once-dead can reappear. At haunted houses, children dip their hands in buckets of cold noodles and spaghetti sauce. Even if you tell them what they touched, they know they felt guts. And children surmise that with the right Halloween makeup, costume and demeanor, they can frighten even the most skeptical adult. We do grow up. We get jobs. We have children of our own. Along the way, we lose our tendencies toward magical thinking. Or at least we think we do. Several streams of research in psychology, neuroscience and philosophy are converging on an uncomfortable truth: We’re more susceptible to magical thinking than we’d like to admit. Consider the quandary facing college students in a clever demonstration of magical thinking. An experimenter hands you several darts and instructs you to throw them at different pictures. Some depict likable objects (for example, a baby), others are neutral (for example, a face-shaped circle). Would...

Words: 971 - Pages: 4

Economics

...HW assignment 4 (Week9): Analysis of the Business Cycle. The main objective of this exercise is to get students thinking analytically and creatively about the two-edged nature of many economic phenomena so as to present a “balanced” perspective based on economics principles, theories and concepts against the backdrop of conceptual and analytical thinking. Visit the web sites or similar ones containing national economic data. National Economic Accounts at the Bureau of Labor Statistics at http://www.bea.gov , Bureau of Labor Statistics at http://www.bls.gov/data/, The Conference Board at http://www.conference-board.org/economics/indicators.cfm, US Census Bureau at http://www.census.gov/mtis/www/mtis_current.html, National Bureau of Economic Research at http://www.nber.org/releases/, The Federal Reserve at http://www.federalreserve.gov/releases/h15/update/ Review the most recent 8 – 12 months of data on real GDP growth, inflation/CPI, unemployment, Interest rates, consumer confidence index, consumer sentiment index, inventory level, and other relevant economic data. Based on the collected data, analyze the current macroeconomic situation and its impact on any two(2) Monopolistically competitive firms of your choice. Explore in particular how the two companies’ respond to the macroeconomic conditions in terms of their: • stock performance, • current and future sales revenue, • current and future profits, • labor costs, and • hiring decisions. Your paper should...

Words: 377 - Pages: 2

Thinking

...Thinking and Decision Making Paper MGT 350 Barak Morton Jason Fynewever, Miranda Snyder Tia Fraser Tammy Wilson The world is a very diverse place made up many different cultures which would lead to many different look at a situation. With the diverse country we live in we have to take into account all the different thinking styles as well as different decision making processes to come to a decision that is best. With all of the different thinking styles we are able to make decisions in both our professional and personal life in which would be based on many the many aspects of our life. Throughout this paper we will be examining similarities and differences between three thinking styles: emotional, logical and optimistic. As a team we will compare and contrast these three different types of thinking styles as well as comment on how each affects the critical thinking process. We will also apply critical thinking to the decision-making process by discussing workplace examples. These examples will highlight each of the three different thinking styles we chose for this paper. Emotional Thinking Style In times of high emotion one is quick to respond rather than to use critical thinking to consider the situation and the possible consequences of the response. Emotional Thinking refers to the ability or inability to distinguish emotions and thoughts, or how one successfully (or unsuccessfully) applies sound judgment and reasoning to......

Words: 884 - Pages: 4

Economic

...Principle of economics “Economics is about making choices when options are limited.” ((O'Sullivan, 2011 p.13) The world revolves around choice, and its made by all sorts of people. The economist job isn’t to choose for us but to help us understand the trade offs. Decisions are not made to be spontaneous. Therefore it takes a lot to consider what to buy, what occupation to pursue, and how money to save. Economist, understand this in all matters so the key questions are as follows; what products do we produce? How do we produce the products? Who consumes the products? (O'Sullivan, 2011 p.4) But this isn’t the only thing an economist considers, there also includes four elements to consider for decision-making. An economic way of thinking is through assumptions, isolate variables, think at the margin, and respond to incentives. (O'Sullivan, 2011 p.8) Real life situations, call for real life theories. One major real life problem is of alcohol abuse. Two economic solutions are to impose higher taxes, or increase the prices. Both of these would be considered a good solution because people act rationally in their own self-interest. (O'Sullivan, 2011 p.6) Imposing taxes or increasing the prices we would assume that every drink has the same alcohol effect towards people. To focus on the effects of alcohol abuse economist would make assumptions that imposing taxes and increasing prices would decrease alcohol consumption. Of course it also depends on the way that the inflation would...

Words: 480 - Pages: 2