For example, wile making a decision to either go to college and attain intellectual enrichment at a given cost or leave school and spend the fee in a luxurious life. Te opportunity cost of an item is the cost foregone to acquire another piece. Wen making economic decision, mnagers ought to be conscious of the opportunity costs that go along with each imaginable decision made (Gregory 2012). Acording to Laurence Sideman and Gregory economist, wll usually assume that people are rational. Areasonable person will do his best to goal, o objective gives favorable working conditions.
Arational decision maker takes an action if the marginal benefit expected exceeds the marginal cost (Gregory 2012). Icentives induce people to act in a particular manner. Tey can either be in the form of punishments or rewards. Cnsidering the case where, te price of an apple rises, cnsumers will buy fewer apples. A the same time, aple orchards will tend to increase production thus hiring more labor force and gather additional apples. Hgh market prices provide incentives for consumers to consume fewer to produce extra (Parker, 2008).
Te above principles are essential to the management on their decision-making criteria. Tey guide the managers to making the most appropriate decisions. Tis policy will enable the business to monitor the market efficiently and identify the opportunity cost available thus making the right tradeoffs and at the right season to ensure a fluent flow of trade. Bsiness interactions are very essential to the management of every company. Mnagers must be able to identify their competitors. Fr example, bth the American and the Japanese tend be significant competitors because they tend to produce similar goods like motor vehicles (Gregory 2012).
Tade competition is not the same as a sports game where one party will eventually lose. O the contrary, tade against countries will better each party. Oganizations select what kind of personnel to fire to work for them and also what type of commodity to produce. I return, huseholds make their decision on where to work and what to buy with their incomes (Gregory 2012). I nearly all cases, eperienced persistent inflation been as result of growth in the quantity of money by the government.
Wen a government fails in monetary policies and makes large amounts of money, te value of the money goes. ..
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