Economics Concepts Worksheet

Economic Concepts Worksheet

Concept Application of Concept from Personal Experience Reference to Concept in Reading

Economic Perspective

Economic Perspective involves three elements

1. Scarcity and choice

2. Rational Behavior

3. Marginalism

Economic Perspective is the understanding of why people choose one want over another

When I graduated with my under-graduate degree I had to make the choice to either move back to my hometown where my family and friends were or take employment in a different state. I chose to move back to my hometown because I figured I would have been able to find employment in my hometown. In retrospect, I had much more potential to make more money if I would have chosen to take the position the other state. “ Individuals look for and pursue opportunities to increase their utility вЂ" that is, pleasure, happiness, or satisfaction” (McConnell & Brue, 2004, p.2).

“Self-interest behavior is simply behavior that enables a person to achieve personal satisfaction, however it may be derived” (McConnell & Brue, 2004, p.3).

Marginal Analysis

Marginal Analysis involves comparing the extra benefits of a choice with that of the extra cost of that same choice

Recently, I had to choose between getting a new mobile device which could link to my Microsoft Outlook and had a full key pad for $300 or a device for $150 which did not have a full key pad or the ability to sync with my Outlook. I decided the extra cost of a device which would assist with work and school worth the benefit compared to the cheaper less advanced mobile device. “In a world of scarcity, the decision to obtain the marginal benefit associated with some specific option always includes the marginal cost of forgoing something else” (McConnell & Brue, 2004, p.3).

Economic Systems

There are two general types of economic systems: the market system and the command system.

Market System = Capitalism

Private ownership of resources and the use of markets and prices to coordinate economic activity (McConnell & Brue, 2004, p.20).

Command System = Socialism

Government owns most of the property resources and decision making is made though a central economic plan (McConnell & Brue, 2004, p.21).

My place of employment is an independent retailer for AT&T. The owner of the company has the choice to set prices on product based upon his decision of what will be best to induce consumption of his product. I know another person who is also an independent retailer for AT&T and he sets his prices differently than that of my owner. The result is open competition by two individuals who are willing to produce these goods through their own decisions.

China is an example of a command system. The government of China owns most of the property resources and a central board makes the the vast majority of the decisions concerning the use of the government owned resources. For instance, the government of China owns the oil of the company thus they are able to allocate its production based upon its derectives. Economic System is, “a particular set of institutional arrangements and a coordinating mechanism вЂ" to respond to the economizing problem” (McConnell & Brue, 2004, p.20).

“Economic systems differ as to (1) who owns the factors of production and (2) the method used to coordinate and direct economic activity” (McConnell & Brue, 2004, p.20).

Law of Demand

Is the relationship between price and the amount of a product people want to buy

I work in the mobile phone and service industry as a sales agent. As a Sales Associate the demand of customers has a direct affect on the increase