Importance Of Economic Decision Making

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Question 2 Economic models aid managers and economists to evaluate the economic decision-making process. Each of these models relies on a number of norms, or simple factors that are existing in all decision conditions. Virtually everybody in the world is involved in economic decision making at every point in time, from the wealthy people investing in real estate, to the small business proprietor signing a contract with a supplier and also the teen buying a new dress or applying for a job; and these straightforward factors almost always come into play. Working on a Budget Even the millionaires and billionaires and institutions in our society have inadequate monetary resources with which they work with. The limitations of a budget affects almost all economic decision making process because when you put together your cost of living it should not be more than the money available. The presence of cash does not necessarily limit one in economic decision making process since one can borrow funds to meet up his budget. Even the borrower still decides on how he will pay up the sum borrowed which still brings into play the issue of limited resources.…show more content…
This corresponding act is known as maximizing value, and you need to practice this for a while before you can master it. Rational Decision Making Practically, all economic models and theories have one conflicting blemish: they believe that all economic decision makers behave reasonably and sensibly, taking all obtainable information into account in an unbiased mode before making a decision. As it may be correct that most individuals and organization’s endeavor to do this, the actuality of the decision making is different. People might make decisions as a result of their past experience or occurrences in their life and this can be termed as emotional

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