CO561 Phoenix Wk 1 Decision Making in Purchasing a Personal Computer Paper

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Economics

CO561

University of Phoenix

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Good morning, Attached is the Assignment, Requirements and Chapters for Week 1 of my Eco/561 class. There are 6 Chapters for this week, but the instructor only wants us to read a few sheets in each chapter and I included the pages within the Assignment and Requirements. Thank you

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ECO/561 WEEK 1 INDIVIDUAL ASSIGNMENT AND REQUIREMENTS Academic Resources • Student Supplemental Textbook Materials Instructions: McConnell, C.R., Brue, S.L., & Flynn, S.M. (2015) Economics: Principles, problems, and policies (20th ed). Boston, MA: McGraw-Hill/Irwin. Required Learning Activities (HERE ARE THE CHAPTERS AND THE PAGES THAT YOU WILL NEED TO COMPLETE THE ASSIGNMENT) • Economics, Ch. 1: Limits, Alternatives, and Choices Read pages 5-12 and 15-23 of Economics. • Economics, Ch. 2: The Market System and Circular Flow Read pages 43-45 of Economics. • Economics, Ch. 3: Demand, Supply, and Market Equilibrium Read pages 53-67 of Economics. • Economics, Ch. 7: Utility Maximization Read pages 153-159 of Economics. • Economics, Ch. 18: Public Finance: Expenditures and Taxes Read page 406 of Economics. • Economics, Ch. 24: An Introduction to Macroeconomics Read page 532-533 of Economics. HERE IS THE ASSIGNMENT BELOW: Influence of Economics on Household Decision Making Instructions: Purpose of Assignment To locate, retrieve, and evaluate the effects of macroeconomic indicators on your own decision making. Assignment Steps Resources: Tutorial help on Excel® and Word functions can be found on the Microsoft® Office website. There are also additional tutorials via the web offering support for Office products. Scenario: Consider your last big purchase such as a car, appliances, home repairs, home purchase, computer equipment, college tuition, or another "big-ticket" item, which are often purchased using loans/financing (by borrowing money). Also, consider your decision-making process that led you to choose a particular make, model, or brand of the product (or service) you purchased and whether it was the right time to make the purchase given economic conditions at the time of your purchase. While analyzing your decision, keep in mind everything from interest rates to the prices of complementary and substitute goods are driven by human economic behavior. Develop a minimum 1,050-word analysis of your decision-making process in which you include the following: • Retrieve statistics on Real Gross Domestic Product (GDP) and on Real Personal Consumption Expenditures (PCE) by year for the last ten years. You can retrieve those statistics from internet sources including, but not limited to, the Federal Reserve of St. Louis's FRED web site, the U.S. Department of Commerce's Bureau of Economic Analysis (BEA) web site, or another credible source of your choice. Post these statistics in a single worksheet of an Excel® workbook and submit your Excel® file with your report. In your report, discuss the latest 10-year trends in both GDP and PCE. Also, discuss how the trends in GDP compare with trends in PCE. You are encouraged to include graphs of these statistics in your report; you could create the graphs in Excel® and copy them into your report. • Retrieve statistics on the Effective Federal Funds Rate and on the Consumer Price Index: All Items Less Food and Energy by year for the last 30 years. You can retrieve those statistics from internet sources including, but not limited to, the Federal Reserve of St. Louis's FRED web site, the U.S. Department of Labor's Bureau of Labor Statistics (BLS) web site, or other credible sources of your choice. Post these statistics in a single worksheet of an Excel® workbook and submit your Excel® file with your report. In your report, discuss how the trends in the Effective Federal Funds Rate compare with trends in inflation. If you took out a loan to pay for your "big-ticket" purchase, what was the interest rate on your loan? Were interest rates rising or falling at that time? Were interest rates relatively high or low at that time? You are also encouraged to include graphs of these statistics in your report. • Discuss the influence of any Federal government or state government programs, such as tax credits or tax deductions for energy saving/efficiency purchases, on your decision to make your last big purchase; or if government incentives did not factor into your decision, explain why not. • Develop conclusions about the economy's influence on personal and business decision-making relative to purchases of big-ticket items, investments, or other major purchases. Cite a minimum of three peer-reviewed sources. Note: The Federal Reserve of St. Louis, the Bureau of Economic Analysis, and the Bureau of Labor Statistics can be cited to fulfill this requirement. Format your paper consistent with APA guidelines. Click the Assignment Files tab to submit your assignment. Be sure you submit your paper as well as the two required Excel® files. Supporting Material: Influence of Economics on Household Decision Making Grading Guide
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Running head: Decision-Making in Purchasing a Personal Computer

Decision-Making in Purchasing a Personal Computer
Name
Institutional Affiliation

1

Decision-Making in Purchasing a Personal Computer

2

Decision-Making in Purchasing a Personal Computer
I have always wanted to purchase a PC of my own since I have always needed it for my
studies. I am a quality-oriented individual so I knew I wanted to go for a high quality PC. However,
for quite some time, this remained to be a mere desire putting into consideration I needed nothing
less than $800 to purchase the PC. Then it came a time when I received some money, around
$3000, to cater for several things here and there. I knew this was the right moment for me to go
for the PC that I’ve always desired. Contrary to my plans, I ended up purchasing the PC at a higher
price but also went home with a Home Theater System. Following this chronicle of events, there
are several factors that were huge determinants in my decision-making process of purchasing the
PC.
To begin with, before I bought the PC, I was never able to buy it there before because of
my limited income. Despite the fact that I got money that could was enough for me to buy a
computer, I could not go for it because my income was limited, and hence my budget could only
cover my basic needs. If I were to buy the computer there before, I would do it at the expense of
other important things like food, clothing and books.
Choice was another influential factor in my decisi0on-making process. When I went to the
electronics dealer, there I found several high quality PCs with varying prices. There were those
that sold for more than others. This was based on the fact that some had better specifications than
others. Though I really wanted to go for the PC set that had the best specification, I hand to make
a choice based on the amount of money I could safely part with for the purposes of purchasing the
PC. This led me to settle on a lower but fair quality PC which went for $1000.

3

Decision-Making in Purchasing a Personal Computer

Finally, the aspect of marginal benefit was relevant, seeing that after purposefully visiting
the electronics dealer, I went home with a computer and a home theater. An offer had been made
for a free home theater system for every purchase of a PC that was going for $1000. Keeping in
mind that I had an initial budget of $800 for the PC, I decided to increase it so that I could be
eligible for a free home theater system. If I would go for the $800 PC and later come to purchase
a home theater system, I would have to buy it for $400. With that in place, the marginal benefit
was greater than the marginal cost hence I went ahead and purchased the $1000 PC plus a free
home theater system.

Statistics of GDP and PCE for the last 10 years
GDP LINE GRAPH

6.0
4.0
2.0

-6.0
-8.0
-10.0

2016-10-01

2016-02-01

2015-06-01

2014-10-01

2014-02-01

2013-06-01

2012-10-01

2012-02-01

2011-06-01

2010-10-01

2010-02-01

2009-06-01

2008-10-01

2008-02-01

-4.0

2007-06-01

-2.0

2006-10-01

0.0
Series1

4

Decision-Making in Purchasing a Personal Computer

Over the years, the GDP has been inconsistent evidenced by the irregular troughs and crests as
illustrated by the line graph. This insistencies can be attributed to various variables in the country’s
productivity such as inflation and other factors.
PCE LINE GRAPH

14000.0
12000.0
10000.0
8000.0
6000.0
Series1

4000.0
2000.0

2016-09-01

2016-01-01

2015-05-01

2014-09-01

2014-01-01

2013-05-01

2012-09-01

2012-01-01

2011-05-01

2010-09-01

2010-01-01

2009-05-01

2008-09-01

2008-01-01

2007-05-01

0.0

The Real Personal Consumption Expenditure has been steadily increasing over the years as
indicated by the line graph. This means that each year, there have been positive income changes
for individuals enabling them to allocate more money for spending on their expenditures.
In terms of comparing GDP and PCE, there is no any evident correlation. This can be concluded
that these two are independent for one another, ruling away a causative relationship.
Statistics of FEDFUNDS and CPI for the last 10 years
FEDFUNDS LINE GRAPH

5

Decision-Making in Purchasing a Personal Computer
12.00
10.00
8.00
6.00
4.00

Series1

2.00

2016-06-01

2014-07-01

2012-08-01

2010-09-01

2008-10-01

2006-11-01

2004-12-01

2003-01-01

2001-02-01

1999-03-01

1997-04-01

1995-05-01

1993-06-01

1991-07-01

1989-08-01

1987-09-01

0.00

As evidenced by the line graph, the Federal Funds Rate has been on a generally decreasing form
with time. This means that the interest rates charged by different depository institutions to other
institutions have been steadily decreasing over the years.
CPI LINE GRAPH

300.000
250.000
200.000
150.000
Series1

100.000
50.000

2016-03-01

2014-04-01

2012-05-01

2010-06-01

200...


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