ECON 201 SNHU Week 8 Frontiers of Microeconomics Discussion

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Econ 201

Southern New Hampshire University



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ECON Week 8 Discussion: Frontiers of Microeconomics Economic behavior is more complex than assumed by conventional economic theory. Political economy explains the functioning of government. Behavioral economics ties psychology into human behavior. Economists assume that individuals make rational decisions. However real people are more complex. Based on what you have learned in your assigned reading, answer the following questions in your initial post: 1. What are the human behaviors economists should observe when creating economic models? Example: people tend to find solutions that are good enough, but not the best solutions. 2. GIVE ONE REFERENCE TO SUPPORT In your responses, comment on at least two of your peers' posts and share example of how non-rational human behavior can change an economic outcome. GIVE ONE REFERENCE FOR EACH RESPONSE CLASSMATE #1- Ciana Gregory Despite all that we have learned, there is much more that influences the market than simply government incentives, technological advancement, etc. — ie. human nature. There are quite a few behaviors that economists should consider, such as the simple fact that not everyone acts rationally. People are stubborn and give too much weight to their own assertions, creating a detrimental overconfidence. "[Consumers] give too much weight to a small number of vivid observations" (Mankiw, 2021) that disproportionately affect their view of a product. Additionally, people are wealth maximizers, but value fairness. It is more common for someone to offer 30 to 40% of profit and take the remainder for themselves to maintain a level of fairness to their offers (Mankiw, 2021). Reference Mankiw, N. (2021). Principles of Economics. CLASSMATE #2 - Adam Courtney posted Oct 20, 2021 7:24 PM Traditional economics show that human behavior comes from absolute rationality, this is the economic model of human behavior. In behavioral economics, the study of biases and the tendencies of humans and how this affects their decisions they make to improve on or change current economic theory. This can help determine if people are making good or bad decisions and what could be done to make wiser decisions in the future. The question can be asked of why do people do what they do, but it should really be predicting what they will do. The psychology side will try to figure out why, the economic side tries to predict and find the trends. Another question is when the middle or lower class get something like a stimulus check, will they use it wisely and pay bills or other necessities or will they spend it on non essential things that could be considered along the lines of entertainment or things related to a hobby.
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ECON Week 8 Discussion and Replies: Frontiers of Microeconomics
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ECON Week 8 Discussion and Replies: Frontiers of Microeconomics
Economists are essential players in any country. They determine the interactions between
people, governments, and the environments in influencing economic growth. Their
understanding of how the economy operates based on the interactions with the underlying
population offers them the ideal framework for developing reliable solutions that guarantee
better outcomes. It is essential to mention that there are various dimensions that economists may
follow when determining the effects of the prevailing trends on a country's growth (Mankiw,
2020). From a behavioral dimension, economists must evalua...

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