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Microeconomics

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Running Head: MICRO-ECONOMICS 1
Microeconomics
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MICRO-ECONOMICS 2
Microeconomics
Regarding how individuals make decisions, the ten principles of economics depict several
lessons, including that one has to sacrifice one of his/her favorite possessions to get another thing
that he/she likes. Invariably, the act is a form of trade whereby one surrenders one thing for
another. Additionally, making decisions entails comparing the benefits and costs of alternative
options following the fact that individuals face tradeoffs. Precisely, the right decision is the one
that involves achieving the maximum possible benefits and incurring the least possible expenses
(adopt the investment that bears the least possible opportunity cost). Moreover, effective
decisions entails realizing the optimum possible marginal benefits and deploying the minimum
possible marginal costs in any form of investment (Mankiw, 2011). Consequently, rational
decision makers take an action only if the action’s marginal benefit exceeds the underlying
marginal costs. Finally, people respond to incentives and hence they tend to opt for the decisions
that are cheaper (where they will spend less) and reduce their utilization regarding the decision
involving an increased or high expenses.
On the other hand, since an economy entails an interaction of people in diverse ways, the
nature of interaction is of major concern. Precisely, trade has the potential of making everyone
better off. Effective trade encompasses free and fair competition amongst the operators and
hence the competition ensures prevalence of quality products in the market. The quality products
and services are beneficial to all the underlying stakeholders since the sellers can fetch high
prices for their commodities and yet the buyers can realize optimum satisfaction of their
consumer needs. Additionally, market economy is amongst the best ways of allocating resources
via decentralized decisions of many households and firms as they engage in effective interaction
in the markets for commodities. Free market economies further advance the efficiency of the

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Running Head: MICRO-ECONOMICS 1 Microeconomics Name Institutional Affiliation 2 MICRO-ECONOMICS Microeconomics Regarding how individuals make decisions, the ten principles of economics depict several lessons, including that one has to sacrifice one of his/her favorite possessions to get another thing that he/she likes. Invariably, the act is a form of trade whereby one surrenders one thing for another. Additionally, making decisions entails comparing the benefits and costs of alternative options following the fact that individuals face tradeoffs. Precisely, the right decision is the one that involves achieving the maximum possible benefits and incurring the least possible expenses (adopt the investment that bears the least possible opportunity cost). Moreover, effective decisions entails realizing the optimum possible marginal benefits and deploying the minimum possible marginal costs in any form of investment (Mankiw, 2011). Consequently, rational decision makers take an action only if the action’s marginal benefit exceeds the underlying marginal costs. Finally, people respond to incentives and hence they tend to opt for the decisions that are cheaper (where they will spend less) and reduce their utilization regarding the decision involving an increased or high expenses. On the other hand, since an economy entails an interaction of people in diverse ways, the nature of interaction is of major concern. Precisely, trade has the potential of making everyone better off. ...
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