House Readiness

A New House-Readiness

Brittney A. Krause

XECO212

July 29, 2011

Wilhelm Nieweglowski

A New House-Readiness

When it comes to home buying there are many factors that play in it. One is economics and the ten principles of economics. I believe that almost all the principles of economics are used in the decision of buying a new home. Since there are so many different things to look at when buying a house.

Principle 1 is people face trade-offs. This includes efficiency which is the property of society getting the most it can from its scare resources. This is include in home buying since the market is down and people are in foreclosures. The houses on the market are losing their value almost every day. When a person is looking for a home they want the most for their money. With the economy this is not a lot since people are not able to get loans as easy as before. Principle 2 is the cost of something, is what you give up for it. People are giving up eating to pay bills are put gas in the car. When buying a house it is the same in a way. A person needs to decide what they can afford. They look at what they can give up. Example having a gym membership is something someone might give up so they could buy a new house. Opportunity cost is whatever must be given up to obtain some item. The item is the house and the gym is the item given up. Another example is giving up going out every weekend so that a person can save up money and be able to afford buying the house. Principle three is rational people who systematically and purposefully do the best they can to achieve their objectives. This principle is talking about people looking at their objectives and achieving them any possible way. The principle also goes in with house buying when looking at marginal changes. The small incremental adjustments to a plan of action. This is means the edge of the margin. This also includes marginal benefits and marginal costs. Principle four is people...