INITIAL QUESTION IN BOLD IS ONLY FOR YOUR REFERENCE What is economics? What role does economics play in your personal and organizational decisions? Provide an example of the role of economics in decision making1.Economics is the study of how limited assets are purchased by the demand, based on the costs charged by their supply in relationship to that demand. Economics is all about making smart choices. We have to make choices each and every day of our lives. How much should I spend on groceries? Do I really need new shoes? What should I cook for dinner? Should I return to school or should I just settle for the job I have now? Coordination is the main keyword to economics, there are three issues that need resolution in our economy. They are how much to produce, how to produce it, and who will produce it.2.Economics is the study of how people, firms or institutions choose to allocate resources. Resources are not always dollars and cents: time, skill and land are all resources. People make economic decisions with the intention of maximizing their return. For example, a college student might allocate his time and substantial amounts of money to earn a degree. In return, that degree will ideally yield him numerous job opportunities and an increased income. Some of the most important life decisions are made using economic reasoning. When you choose to have children, whom you marry and where you will live are just a few of these. Before deciding on any of these events, a person performs what economists call a ‘cost-benefit analysis.’ Simply put, the pros are weighed against the cons. If one choice provides more ‘utility’ (or personal satisfaction) than another choice, a decision is made. How much you buy once an item’s price tag changes is also an economic issue. The responsiveness to a change in price is known as elasticity. If you continue to buy a product in the same quantity regardless of a price change, like gas, then it is an inelastic good. On the other hand, if you cease to buy lattes when the price is raised by 50 cents, then coffee is elastic.3. Economics is the study of how we allocate our resources (money, time) for our needs and wants. Some people think that when deciding what is important you look at what is actually needed and what a person wants, food, clothes, shelter, and transportation are always needed anything outside of that is a want, cable, and internet are just a couple of examples of wants and not essential needs that people pay for. However if you look at the total credit card debt in this country you will see that many people do not feel as you do. Do you feel the recent recession has resulted in a change of how we actually value things before buying? If so, why?INITIAL QUESTION IN BOLD IS ONLY FOR YOUR REFERENCE What is the difference between a movement along and a shift of the demand curve? What is the effect on the equilibrium price and quantity that results from an increase in demand, supply, and both? Provide examples for each instance. What is the role of supply and demand in decision making? Provide a real-world example.4.The difference between a movement along and a shift of the demand curve is that the movement along the demand curve is a change in quantity and demand and the shift of the demand is the cause of either a rise in the income, a rise in price, or a fall in price. The equilibrium price is the state where the demand and supply both equal one another. For example when demand and supply are both increased with equilibrium price nothing happens because they are already equal. With quantity when supply is increased demand will increase, but when demand increases supply will decrease. For example if a small family owned store that was located in a town where the population was 3,000 and another 1,500 people moved into another town then the demand of products will increase because the supply of products will decrease5.The difference between a movement along and a shift of the demand curve is the movement represents a change in price or quantity. The equilibrium is the point where supply meets demand, and if there is an increase in price and everything else stays constant, than that will cause a an increase in quantity. A real life example of this situation occurred when I worked for a parking company. The company had increased the price to park which then resulted in the quantity of space to increase. Supply and demand plays a major role in decision making. Consider when there is a drought of a certain product, the demand is there but the supply is not, this will cause consumers to look for substitutes. For example, back in fall of 2006 Sony released a limited amount of the Playstation 3, so many of the gamers that were looking forward to the release were left out, and this caused many customers to switch to other consoles.6.A movement is the effect of change in price with the quantity and demand. While shift is the effect on anything but the price. (Colander, 2013) The equilibrium price is the amount of money an item is going to be sold in the market. The equilibrium quantity is how many the people want. Example. Let’s take the Honda Ridgeline. Back in 2009-2013 these compact trucks were selling like hot cakes. Now, they are not selling. People are saying that they do not look like a real truck. Back then they did not care but today is another day. Each year they made them they made over 1000 of them. Come 2015 they will not make them anymore because no one wants them anymore.