MerrandaR_ECO365_WK1.docx

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Running head: BEHAVIORS OF THE ECONOMY 1 Behaviors of the Economy Merranda Ramirez ECO365 February 1, 2018 William Akamine
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BEHAVIORS OF THE ECONOMY 2 Behaviors of the Economy The economy measures the individuals of society as a whole and ultimately determines how the world or country is functioning. There are three ultimate fundamentals in which the principles are divided into these respective categories; How people make decisions, How people interact, and how the economy works as a whole (Mankiw, 2015). Ultimately, when the economy is functioning well the prices and what individuals will pay find a balance or equilibrium and the supply and demand will find a balance. The ten economic principles determine the behaviors of a country economically, the principles help understand the importance of policy, finding an equilibrium, and the supply versus demand. How People Make Decisions The very first economic principle is “people face trade-offs.” This is a very determination of how individuals think, like where to spend funds or what to spend funds on. An everyday life example is choosing to use ingredients from home to cook dinner or spend the money and eat out. How is this an example of a trade-off? If the decision is to cook dinner from home, it could take a long time, there could be some missing ingredients, there might be hungry children or chores to get accomplished, but eating out you might wait a short time for food.
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