Submitted by: Submitted by wyee5
Views: 488
Words: 554
Pages: 3
Category: Business and Industry
Date Submitted: 05/10/2013 10:11 AM
Principles of economics refer to the fundamental steps and enable economists to apply them when doing economics which leads to economics analysis (Slemback. T, 2001). One of the ten principles that are to be discussed is “People Face Trade-offs.” This is the first principle and is defined as a decision that is made to achieve a goal needs to sacrifice another goal or something else (Mankiw, 2008). One of the examples of people facing trade-offs is when a worker wants to work overtime and earns more money. To do so, the worker needs to sacrifice time to rest. In this case, time is what the worker sacrifice to earn more wages. If the worker wants to rest more, then he would sacrifice the increase in wages. It could be anything as longs as there’re things to sacrifice in order to get something. Decisions made are based on the individual’s opinion weather its worth or not. In this world today, decisions are made every day by everyone from different range of age. Most of the time, people would make decisions which benefits them the most, even in an organization, benefits were compared in order to maximize profits and minimize costs.
Here’s an example of how decision making is affected by trade-offs in real life. This example happens recently in a firm known as QL Resources Bhd. This company is earning profits by investing in manufacturing marine products such as fish and livestock farming such as chicken. But now, the company had made a decision to focus more on oil palm division to be the main source of profit rather than manufacturing marine products and livestock farming. According to the director of QL Resource Bhd, Chia as cited by TheStar Online (2011), states that the growth of palm oil trees take a long time and lots of capital, but marine products have supply constraints and livestock farming could be infected with diseases. In fact, growing trees are easier to take care. This shows that production of marine products and livestock farming bring more costs and...