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Summary Unit 1 Essay Economics For Managers.docx MBA 6053 Unit 1 Essay De Asha Campbell Economics for Managers MBA 6053 Introduction In this unit essay, we will discuss the benefits of markets to improve outcomes for producers and consumers. We will ana$7.49
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Summary Unit 1 Essay Economics For Managers.docx MBA 6053 Unit 1 Essay De Asha Campbell Economics for Managers MBA 6053 Introduction In this unit essay, we will discuss the benefits of markets to improve outcomes for producers and consumers. We will ana
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Unit 1 Essay Economics For M MBA 6053 Unit 1 Essay De Asha Campbell Economics for Managers MBA 6053 Introduction In this unit essay, we will discuss the benefits of markets to improve outcomes for producers and consumers. We will analyze the difference of elastic and inelastic goods and d...
unit 1 essay economics for managersdocx mba 6053 unit 1 essay de asha campbell economics for managers mba 6053 introduction in this unit essay
we will discuss the benefits of markets to imp
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MBA 6053
Unit 1 Essay De’Asha
Campbell Economics for
Managers MBA 6053
Introduction
In this unit essay, we will discuss the benefits of markets to improve outcomes for producers and
consumers. We will analyze the difference of elastic and inelastic goods and determine changes in
demand. We will describe how marginal analysis, by avoiding sunk costs, leads to better pricing
decisions. We will explain how the importance of opportunity costs to decision-making and how
opportunity costs lead to trade. Lastly, we will evaluate how business decisions can contribute to society
as a whole. Overall, this essay will expand our knowledge and understanding of the role of costs and
prices in decision-making.
Elasticity vs Inelasticity of Demand
Inelasticity and elasticity of demand relates to the subject to which demand is responsive to
economic factors such as pricing, income level, or substitute availability. Elasticity normally determines
how demand shifts when other economic factors change. In other words, quantity is sensitive to a change
of price. When quantity goes down, quantity can increase substantially. Some elastic products include a
chocolate bar or a Porsche car. If Hershey’s chocolate bar was to increase their pricing, there will be other
alternatives or selection of chocolate to choose from. If a Porsche was to increase in pricing, it will
require a higher percent of income in which will either run customers away, channel other options, or
some will just purchase the car regardless of the price. Inelastic demand takes place when customers buy
the same amount of a product regardless the price rises or drops. In most cases, they tend to buy more
when the pricing goes down, and less when the prices increase. Inelastic products have less to none
substitutes or alternatives. For an example, we use gasoline to fill up our cars to get us to our destinations.
In larger cities, like New York or Chicago, individuals don’t mind walking or biking. However, in most
cases we depend on gasoline to fill many voids for transportation. In the year of 2021, we experienced
, one of the country’s largest fuel pipeline network recovered from a cyber-attack. Thousands of gas
stations ran low on supplies and had many of us including truck drivers fearing outage filled tanks and
jerry cans.[ CITATION Ste21 \l 1033 ] This is an example of gasoline being irreplaceable and its essence
of being an inelastic product. Gas shortages had many individuals purchasing gas to fill their cars
regardless of the cost. Individuals consumed this product for longevity and not for short-term purposes
due to the duration of the global cyber-attack.
Marginal Analysis impact on Price Decisions
Economic analysis studies a group of economic systems that shelters production processes and
industries. Its primary focus is to define how efficient the economy is functioning. This definition relates
to the action of marginal analysis. Marginal analysis assumes that decisions are determined by the
measurement of additional costs against additional benefits. What matters the most using this theory is
marginal costs and benefits and how it impacts decision making. Most individuals analyze and look for
ways to benefit from short-term and long-term decisions. Ultimately, one seeks for the best gain or profit
under any circumstance. For an example, it’s relative to visit an ice cream parlor that consist of many
flavors, and you have a hard time deciding which flavor to get or how many scoops to get. A customer
would be opened to purchase an ice cream bowl that is consumed of 3 flavors and additional toppings for
$6.00, so the marginal benefit of this transaction is $6.00. However, the customer may be less eager to
purchase another ice cream bowl at that price. The only way a customer would be willing to purchase an
additional bowl is by a $3.00 expenditure. If there is a decrease from $6 to $3 over an extra bowl of ice
cream, then the marginal benefit declines as the customer’s level of consumption increases. Nothing
matters in decision making except marginal costs and marginal benefits.[ CITATION Hey94 \l 1033 ]
Even though we apply this economic way of thinking in our daily lives, we are also concerned about the
many losses we endure in decision making. Sunk costs can be defined as an experience loss in the
economic world or a cost you can never get back. An example from a real-life perspective is purchasing a
used car off the lot that has several manufacturing defects. The money for the price of the used car is a
sunk cost. There’s no point in wasting money on automobiles with severe issues that affects safety, value,
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