Macroeconomics
Brainstorm common items that you think consumers pay too much for or that you think are overpriced (i.e. movie theater popcorn, brand name items, souvenirs,, etc.). Now think of something more specific, either something that you or someone who know has purchased. For example, I know someone with a baby who was traveling and purchased a small pouch of baby food for $2.00, when even more baby food could have been purchased in a jar for around $0.50.
Write about your example, then use the principles you’ve learned about (like scarcity, opportunity cost, rationality, and marginal analysis) to explain why a person would make the decision to purchase that good.
Post your initial response (minimum of 200 words) no later than Wednesday, 11:59 pm and reply to at least two of your classmates (minimum of 150 words)
Sample Solution
I recently purchased a new laptop. I did my research, compared prices and features between different brands, read reviews and asked friends for their opinions. I chose the
model that was within my budget but still had the features I wanted. In the end, it cost me $1,000 - considerably more than my old laptop but not unreasonable given all of the bells and whistles this one offered.
The decision to purchase this good can be explained using principles like scarcity, opportunity cost and rationality. Scarcity implies that all goods are limited in supply or available at a certain price point which drives up costs for consumers when demand is high . Opportunity cost refers to what we miss out on by making one choice over another; in this case, spending money now on a new laptop rather than on something else later down the line such as a vacation or savings account deposit. Rationality suggests that people make decisions based off of personal preferences which factor in budget restrictions; here I opted for something within my means – albeit expensive – because it met my needs perfectly. Finally marginal analysis helps us understand how small changes can affect our total costs: while increasing your specs might bring up overall price significantly , most of us are willing to pay extra if it means better performance from our device.
All these factors combined made purchasing this particular model an easy decision for me despite its high cost - although time will tell if was worth every penny!