Essay on Principles of Economics

617 Words Nov 29th, 2010 3 Pages
Principles of Economics Paper

Individual decision making is either you do, or you do not. Most people are rational beings basing their decisions on a formula, benefits versus cost. Are the benefits of buying a $1000 television worth it? Are the marginal benefits worth the marginal cost?

Just this morning, I was faced with such a scenario. I was invited over to a friend’s house to try a new video game. I did not go, however, because I knew that I had to read several chapters for my class and write a paper. The benefits were that I would have some time to hang out with my friends and enjoy some much needed free time. The cost would’ve been that I could have not gotten all of my reading done and possibly been late on my
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Centrally planned economies are of a lower caliber quality, because the government decides who, what, and how products will be handled. This however does not meet the consumers wants, only the needs.

Market economies are quite different from centrally planned. Market economies base their who, what, and how answers on the consumers. This gives the consumers more choice and power on their buying habits. In a market economy, products will tend to have higher quality and higher probability of satisfying the consumers. This does, however, target the more willing and capable buyers.

There is a third economic system that was brought about in the nineteenth century: a mixed economy. This mixed economy is a combination of both centrally planned and market economies. This allows for the answers to “who, what, and how?” to be decided by consumers but in which the government has a significant role in the allocation of resources.

Simply explained, social interactions change from one economic system to another. A centrally planned economy restricts free will as far as the questions who, what, and how. Perhaps leaving the society a little less satiated. A market economy will allow for higher paying jobs, better quality products, but targets only a certain demographic. A mixed economy attempts to combine both systems and allow for high quality products, high paying jobs

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