A New House Decision Final

New house Decision

A New House – Decision

John Smith

University of America

September 27, 2010

A New House – Decision

For any person buying a new home, for himself or herself or his or her family, is probably one of the biggest decisions a human will make in his or her lifetime. When considering buying a home, it is important to use several economic principles to help make sure a sound decision. The principles can help ensure that the consumer is weighing the marginal benefits against the marginal costs. The economy and the housing market also play a large role in making the decision to buy a home. This paper will discuss how some of the principles of economics, marginal benefits and costs, the economy, and the housing markets help home buyers make the right decisions.

The first principle of economics, “people face trade-offs,” (Mankiw, 2007) explains that in order for a person to obtain a good that he or she wants, he or she will have to give up something else that he or she also wants. For example, consider someone buying a house. To buy a house, a person would typically need to save a large amount of money for the down payment and all the costs associated with the purchase. For someone to purchase a home that they want, they would need to trade their savings for the house. The trade off of money for the house seems fair but can take away from other parts of a person’s life. Having a house may be more important than owning a nice car, a boat, or a helicopter to some people. To make the decision of buying a home, the consumer must take the time to decipher whether buying a home is worth the trade off what he or she would be giving up.

The second principle of economics is “the cost of something is what you give up to get it” (Mankiw, 2007). This principle basically means that sometimes the price someone is paying for something is not all that it cost. Not only is someone paying the actual price, but he or she is paying for parts...