A New House - Essay
A New House-Decision 1
A New House-Decision
Angel M. Davis
Axia College at University of Phoenix
A New House-Decision 2
In this paper I will discuss which principles of economics directly relate to my decision of purchasing a new house. I will discuss the marginal benefits and cost which will help me make a firm decision. I will also explain how the strength of the economy affects my decision. I will also asses how international trade and the domestic economy played a role in the strength of the economy.
I think that principle one, four, and seven are important to the decision making process of buying a house. Principle one is about trade-offs. Trade-offs are influential in the decision making process. I have to evaluate the new cost of owning a home and what cost I may have to give up in order to purchase a new home. I may have to give up the cost of a vehicle, or cut back on eating out and going to movies to save up to have money for decorating my new home. I may have to sell things to accommodate for the down payment. Principle four is about incentives. People respond to incentives and this can be valuable in the home buying process. According to Mankiw, N. G., (2007), "an incentive can induce a person to act because rational people make decisions by comparing cost and benefits," (p. 6). There are tax credits for first time homebuyers that can help with down payments and closing cost. Incentives like this have increased my interest in purchasing a home. Another important principle that would be beneficial in the decision making process is principle seven. The governments can sometimes improve market outcomes. The housing market is not at its best for the year 2009. I have seen several communities with empty homes due to foreclosures because people are losing jobs and the taxes on the land have increased drastically. The
A New House-Decision
Angel M. Davis
Axia College at University of Phoenix
A New House-Decision 2
In this paper I will discuss which principles of economics directly relate to my decision of purchasing a new house. I will discuss the marginal benefits and cost which will help me make a firm decision. I will also explain how the strength of the economy affects my decision. I will also asses how international trade and the domestic economy played a role in the strength of the economy.
I think that principle one, four, and seven are important to the decision making process of buying a house. Principle one is about trade-offs. Trade-offs are influential in the decision making process. I have to evaluate the new cost of owning a home and what cost I may have to give up in order to purchase a new home. I may have to give up the cost of a vehicle, or cut back on eating out and going to movies to save up to have money for decorating my new home. I may have to sell things to accommodate for the down payment. Principle four is about incentives. People respond to incentives and this can be valuable in the home buying process. According to Mankiw, N. G., (2007), "an incentive can induce a person to act because rational people make decisions by comparing cost and benefits," (p. 6). There are tax credits for first time homebuyers that can help with down payments and closing cost. Incentives like this have increased my interest in purchasing a home. Another important principle that would be beneficial in the decision making process is principle seven. The governments can sometimes improve market outcomes. The housing market is not at its best for the year 2009. I have seen several communities with empty homes due to foreclosures because people are losing jobs and the taxes on the land have increased drastically. The
References: Feiler, K. (1997). Strong Dollar Weak Dollar Foreign exchange rates and the US economy. Retrieved December 13, 2009 from, http://www.chicagofed.org/publications/strongdollar/strongdollar.pdf. Benko, E. (2009). Factors that affect foreign exchange rates. Retrieved December 13, 2009 from, http://e-articles.info/e/a/title/Factors-that-Affect-Foreign-Exchange-Rates/. Mankiw, N. G. (2007). Principles of economics (4th ed.). Mason, OH: South-Western Cengage Learning.