Premium Essay

Xeco 212 Final

In: Business and Management

Submitted By coke091901
Words 1804
Pages 8
Economic Decision to Purchase a House Our behaviors and decisions in our daily lives are affected by economics. When making decisions, we will use economic theories either consciously or subconscious to decide if we will make or reject that decision. The same can also be used to explain our actions and behaviors when making an economic decision to purchase a house. This paper will evaluate how economics affect one’s decision to purchase a new house. First, the decision to purchase a new house is considered a large and important decision by many. This is because the prices of houses are usually very high, and thus purchasing a new house will greatly deplete the savings of an individual. The demand of houses is highly price elastic. Economic theories state that the larger the proportion of income a certain purchase requires, the more price elastic the demand will be. In the case of the purchase of a new house, it will require the spending of a large proportion of an average person’s income, hence this will greatly lower the purchasing power of the individual when the decision is made to purchase the house. Furthermore, buying a new house will require people to shift from a familiar environment to a less familiar environment and this can be a life-changing experience which may be scary to some. Hence, these are all factors which make the purchase of a new house a very difficult decision to make. There are various principles of economics that can be applied to a decision to purchase a new house. First, one of the principles will be that of trade-offs which people have to face. Every decision comes at a cost. In this case, the decision to purchase a new house will deplete people of a large proportion of their savings. The tradeoffs which they face will be alternatives which they get to enjoy with the same amount of money. For example, the same amount of money…...

Similar Documents

Premium Essay

Home Xeco/212

...A New Home XECO/212 September 22, 2012 Jan Cohen A New Home When deciding to purchase a home my husband and I had to ask ourselves how the government bodies affect the housing market. The answer to that question is it the government body plays a big part. The strength of the economy at the time will make us feel comfortable or uncomfortable about the purchase of a new home. We realize a new home will be a large amount of money and time devoted, the stability of the economy is a big factor. The use of marginal benefits and costs will help us determine if it is the correct time to make the purchase. Marginal benefit gives us the satisfaction of our purchase, with the maximum amount we are willing to pay for it. For example if purchasing a three bedroom house costs much more than a two bedroom but we are happier with the three bedrooms then it is a marginal benefit. Marginal cost is the theory that the more houses being built at the time, the lower the cost will be. (Marginal Costs and Benefits, 2009) In times when it is called a buyers’ market shows us that the marginal benefit is better than the marginal cost. During economy hard times we are more concerned with marginal cost than marginal benefit. The government decides the interest rates and tax deductions for consumers when purchasing a home. The lower the interest rate, the bigger the tax deduction, will increase the probability that we will purchase a home. This affects the marginal cost and marginal demand......

Words: 433 - Pages: 2

Premium Essay

Eco 212 Final

... ECO/212 Final Examination Study Guide This study guide prepares you for the Final Examination you complete in the last week of the course. It contains practice questions, which are related to each week’s objectives. Highlight the correct response, and then refer to the answer key at the end of this Study Guide to check your answers. Use each week’s questions as a self-test at the start of a new week to reflect on the previous week’s concepts. When you come across concepts that you are unfamiliar with, refer to the Student Guide for that particular week. The Student Guide provides a breakdown of the readings that align to the Final Examination questions. Week One: Principles of Economics Objective: Explain how the principles of economics relate to decision-making, interaction, and the workings of the economy as a whole. 1. Economists make use of assumptions, some of which are unrealistic, for the purpose of a. teaching economics to people who have never before studied economics b. advancing their political agendas c. developing models when the scientific method cannot be used d. focusing their thinking Objective: Compare and contrast economic systems. 2. In a market economy, a. supply determines demand and, in turn, demand determines prices b. demand determines supply and, in turn, supply determines prices c. the allocation of scarce resources determines prices and, in turn, prices determine supply and demand d. supply and demand determine prices and, in turn, prices......

Words: 2090 - Pages: 9

Premium Essay

Xeco/212

...Associate Level Material Appendix B Price Elasticity and Supply & Demand Fill in the matrix below and describe how changes in price or quantity of the goods and services affect either supply or demand and the equilibrium price. Use the graphs from your book and the Tomlinson video tutorials as a tool to help you answer questions about the changes in price and quantity |Event |Market affected by event |Shift in supply, demand, or both. |Change in equilibrium | | | |Explain your answer. | | |Frozen orange crops in California |Orange juice |Supply (left)—Not as many available |Price will increase and quantity will | | | |oranges to offer consumers. |decrease. | |Hurricanes in the Gulf Coast |Oil |Supply (left)---Oil refineries and |Price will increase and quantity will | | | |equipment is damaged |decrease | |Cost of cotton decreases |Retail |Supply (right)---increase in |Quantity increases and the...

Words: 636 - Pages: 3

Premium Essay

Xeco/212 Week 5 - a New House

...Week 5 – A New House – Risks & Benefits Kathleen Butcher XECO/212 – Principles of Economics 02/9/13 Tonya Wilhelm When purchasing a new home there are many things to consider. Reviewing the risks and benefits when thinking about making a life changing purchase of buying a home can help you determine when is the right time for you. There are multiple government departments that can impact the national fiscal policies but the one that has the potential for the biggest impact is the Federal Reserve. The Federal Reserve is the one that decides if the interest rates increase or decrease based on what the market is doing. There are multiple policies that can have an influence on the different parts to consider in buying a home, such as, mortgage rates, housing starts, and housing prices. The first thing to look at as a consumer is the lending rates. This rate helps lenders decide if they will borrow money from the Federal Reserve to have money to put into mortgages and housing starts.  The higher the interest rates, the higher the cost of buying a home will be. If the interest rates get to be too high, the housing market will become stagnant and cause issues in the economy. The suggestion that I would give to someone looking at buying a home would be to analyze the risks and benefits of purchasing a home. There are so many considerations to take into account for first time buyers and people looking to refinance. When purchasing a home there are people......

Words: 439 - Pages: 2

Premium Essay

Week One Assignment Xeco 212

...Xeco/212 Page 1 A New House: Readiness Xeco/212 Angela Rogers Due: Friday May 24, 2103 Pamela Hammock Xeco/212 Page 2 I feel that purchasing a new home is one of the biggest decisions a family can be faced with. I know that because of the person that I am the main principle I would use when purchasing a new home is the second one, which was the cost of something is what you give up to get it. However it would be safe to say that a decision this big over a period of time would at some point factor in all 10 of the principles. I feel this way because you never know what the future may hold and if you were to make any mistakes when making this decision it could create all kinds of financial problems. If I were making a decision like this I would have to take several things into consideration. One of the things I would consider is the timing. I would want to take baby steps or so to speak, like building smaller goals and going for those first until I reach the final goal of purchasing the home. I would have to weigh my options as whether to buy a house or renting a bigger apartment would be better than the small studio. Yes we would definitely need something bigger with a baby on the way. Another thing to consider is where you would want to send your child to school especially if you are purchasing a home. You would also have to consider the economy and how the real estate market is holding up. You would not want to buy a house and then the value......

Words: 511 - Pages: 3

Premium Essay

Xeco/212 Checkpoint Week 6

...Checkpoint Week 6 June 6, 2013 XECO/212       Money acts as a unit of account. Unit of account is defined as a standard monetary unit of measurement of value/cost of goods, services, or assets.   Unit of account is one of the three functions of money.   It is the standard denomination that prices are measured with.   When I go to work and get paid by the hour, it is me getting paid for the services that I provide. Money is always going to be worth something. The actual value may change but it is always going to be worth something.       Medium of exchange is anything, usually money, which is used to make payments for goods, services, and assets. Medium of exchange (money) is used in trade to avoid going back to the pure barter system.   Although usually it is money, it can be anything that people agree to be worth something.   For instance, gold and silver are other examples of a medium of exchange.   An example of a medium of exchange that I use is my debit and credit cards. They are not actual money but they are used the same.         Money can also be used as a store of value.   That is a way to accumulate value until it is needed.   A lot of people do this for many different things. Paying a down payment on a house or car is one. Also smaller things like when I go shopping, I like to save up all of my extra money so that I can buy more at one time. Many people don’t like to store their money away. People say why save your money, you are not going to live......

Words: 313 - Pages: 2

Premium Essay

Eco/212 Final Project New House Decision

...Final Project: New House Decision ECO/212 February 20, 2010 The arrival of a new baby is a major lifestyle change. The decision to buy a house takes into account pros and cons of making a major purchase. A studio apartment is a difficult living arrangement with a new baby, because it is small and without a separate space for a baby. The studio apartment is not in proximity to schools or services, which are needed for childcare. A house offers space for baby, a yard, schools, and services. The pros of home ownership offer many benefits not available with a rental property. Trade-offs The studio apartment although close to downtown night life, is not close to schools, churches, or shopping centers. This location worked well for the past few years, because children were not part of the equation. Some trade-offs are required before making a housing purchase. Proximity to night life is enjoyable; however, caring for a new baby will limit a carefree lifestyle. Purchasing a home will require a down-payment and closing costs. In addition to a monthly mortgage payment, utilities, homeowner dues, repairs, maintenance, lawn care, insurance, and taxes are costs of ownership. When renting the renter does not have homeowner dues, lawn car, property taxes, and most repairs and maintenance costs. Homeowners unlike renters can make home modifications, without ramifications. Equity in a home increases the homeowner’s personal wealth. Homeownership also signifies stability. A......

Words: 2049 - Pages: 9

Premium Essay

Xeco/212 Week 2 Assignment Supply and Demand Paper

...Supply and Demand University of Phoenix XECO/212 When prospective homebuyers are looking to buy a new home in their area, they should consider the health their local real estate market is in. A prospective homebuyer needs to have an understanding of the many different economic trends a real estate market can have, There are many different business cycles and real estate trends that will have an affect on why a homebuyer would purchase a home and there are different monetary advantages depending on what kind of business cycle going on at the time. The major factor that has an influence on the price of housing is supply and demand of your local real estate. The most basic economic principal on a products price is supply and demand, Supply and demand determines the price of products based on the availability products. If a products demand is high and the supply is low then the price will increase, because people are buying large quantites of the product and if supply is high and the demand is low, It’s probable that people are not buying the product at that time so the price will generally be lower than it would if people were buying a large amount of the product. There will always be a need for homes because there will always be people that need them which makes homes inelastic. The terrorist attacks in September of 2001 created a substantial amount of uncertainty within our economy and spawned a consumer confidence......

Words: 707 - Pages: 3

Free Essay

Ped 212 Week 5 Final Paper

...PED 212 WEEK 5 FINAL PAPER A+ Graded Tutorial Available At: http://hwsoloutions.com/?product=ped-212-week-5-final-paper Visit Our website: http://hwsoloutions.com/ Product Description PRODUCT DESCRIPTION PED 212 Week 5 Final Paper, Lesson Information: Grade level: I chose the grade level of third graders which is normally their physical and mental development skills are beyond the skill level of the activity I have choosing in my lesson plan. Estimated level of development stage for this age/grade: Uphold correspondence for third graders in their first 5 months of school Number of students: There will be ten students involved in my activity. I chose this small group so that I’m physically able to assist each student’s hands on. Fundament skill to be taught: Applying movement principles and skills in jumping and landing in a small group State standard : According to NASPE the state board of Education adopted the standard in 2007 and benchmarks and indicators on June 8, 2009. Ohio’s Academic Content Standards in Physical Education are made up of six standards: Standard 1: Demonstrates competency in motor skills and movement patterns needed to perform a variety of physical activities. Standard 2: Demonstrates understanding of movement concepts, principles, strategies and tactics as they apply to the learning and performance of physical activities. Standard 3: Participates regularly in physical activity. Standard 4: Achieves and maintains a......

Words: 269 - Pages: 2

Premium Essay

Eco 212 Final Exam

...ECO 212 Final Exam   To purchase this Tutorial click below link : http://homeworkgallery.com/index.php/product/eco-212-final-exam/ ECO 212 Final Exam A 1)Economics does not study correct or incorrect behaviors, but rather it assumes that economic agents make the best decisions given their knowledge of the costs and benefits. What term best describes this behavior? 2) By definition, what is economics the study of? 3) What is the term in economics by which a group of buyers and sellers of a product come together to trade? 4) Which of the following statements describes the actions of producers in the circular flow model? 5) If a commercial dairy farm wants to raise funds to purchase feeding troughs, in which market does it do so? 6) Which of the following is not a critical function of the government in facilitating the operation of a market economy? 7) If demand is inelastic, the absolute value of the price elasticity of demand is 8) Economists in general 9) A demand curve which is ________ represents perfectly inelastic demand, and a demand curve which is ________ represents inelastic demand. 10) A decrease in the price of GPS systems will result in 11) At a product’s equilibrium price 12) If, for a product, the quantity supplied exceeds the quantity demanded, the market price will fall until 13) Marginal revenue product of labor for a competitive seller is 14) Let MP = marginal product, P = output price, and W = wage, then the equation that represents the...

Words: 1124 - Pages: 5

Premium Essay

Acct 212 Entire Course with Final

...ACCT 212 Entire Course With Final To Buy This material Click below link http://www.uoptutors.com/acct-212/acct-212-complete-class ACCT 212 Week 1 DQ 1 Financial Statements ACCT 212 Week 1 DQ 2 Prepaid Expenses vs. Unearned Revenue ACCT 212 Week 2 DQ 1 Accrual vs. Cash Accounting ACCT 212 Week 2 DQ 2 ACCT 212 Week 3 DQ 1 Ethical Business Decisions ACCT 212 Week 3 DQ 2 Trade Credit – Accounts Payable ACCT 212 Week 4 DQ 1 Inventory Management ACCT 212 Week 4 DQ 2 LIFO ACCT 212 Week 5 DQ 1 Non-current Assets and Related Liabilities ACCT 212 Week 5 DQ 2 Raising Capital (Cash) ACCT 212 Week 6 DQ 1 Stockholders Equity ACCT 212 Week 6 DQ 2 Net Income vs. Net Operating Cash ACCT 212 Week 7 DQ 1 Financial Statement Analysis ACCT 212 Week 7 DQ 2   This course has two course projects due. The first, Course Project 1, reinforces the basic principles of accounting and application of the accounting information system. It is completed in two parts. The second, Course Project 2, is an opportunity to show the ability to analyze financial statements to arrive at conclusions based upon the analysis. Course Project 1 – Overview and Guidelines | Course Project 2 – Overview and Guidelines Course Project 1 – Overview and Guidelines Course Project 1 consists of two parts, A and B, respectively. There are 10 requirements for you to complete in this exercise, Part A has 1-3 and Part B has 4-10. Part A is due at the end of Week 3. Part B is due at the end of Week 5. See......

Words: 2262 - Pages: 10

Premium Essay

Xeco 212 Checkpoint: a New House – Readiness

...Checkpoint: A New House – Readiness Leonard Sugue University of Phoenix XECO 212 Economic Theory Audra Sherwood February 17, 2011 A New House – Readiness Deciding to buy a house is a lifelong goal for many people. Imagine that you are renting a studio apartment and have just discovered you are having a baby. Your present apartment is small and far from schools and local services. You have decided to move. There are many factors that come into play when making such a large and weighty purchase. Examine the decision-making process from the perspective of an economist. In your Final Project, you use these principles and other factors to make a final decision whether to buy a house. Purchasing a home for the first time can be overwhelming. A house can be the largest investment someone makes. It can provide advantages, but it can present disadvantages as well. The following principles can be used when deciding to purchase your first home:  People Face Trade-offs (Mankiw, 2007)  The Cost of Something Is What You Give Up to Get It (Mankiw, 2007) When deciding to purchase a home, the principle “People Face Trade-offs” can be applied to help make a final decision. Making decisions requires trading off one goal against another (Mankiw, 2007). The buyer must sacrifice a little to gain a lot. First time home buyers must realize that it takes a lot of money to purchase a home. Buyers must sacrifice things such as vacations, movies, special occasions,......

Words: 498 - Pages: 2

Free Essay

Xeco 212 Final Project: a New House Decision

...Final Project: A New House-Decision Anna Schultz XECO/212 October 30, 2011 Chiara Yates Final Project: A New House-Decision Many of our decisions are influenced by the state of our economy. Purchase of big ticket items such as appliances, furniture, autos, and a home follow a line of investigation before the decision to purchase is implemented. The purchase of a home is one of the largest investments made in a lifetime, and uses many factoring influences before purchase. This paper will show how economics plays into the decision of the purchase. One of the first areas to consider is what the trade-off will be in purchasing a home versus the benefit of renting. What we need to consider is if purchasing a home and providing more space, and living closer to shopping and schools, justifies the added cost in utilities and maintenance of a home. The opportunity costs are another factor to consider. We can vacation closer to home instead of the trip to Europe we had hoped to take. Another option would be to maintain our existing auto instead of buying a new car. We need to research the marginal costs we would need to pay out. These include the amount of down payment, closing costs, taxes, insurance fees, and moving expenses. If we rent a larger apartment, we won’t have those costs, but we also wouldn’t have the benefit of ownership/write-off of interests in loan and property taxes. Monthly rent costs may be as much for a larger apartment versus a home that......

Words: 2003 - Pages: 9

Premium Essay

Xeco 212 International Trade Debate

...Running Head: CheckPoint International Trade Debate CheckPoint: International Trade Debate XECO/212 University of Phoenix International Trade Debate In the world today, we rely on international trade to get the goods and services we require and this has increased our interdependence. However, there are both supporters and opponents of international trade. In the case of supporters, they believe in the advantages of international trade such as an increase in choice of goods and services for consumers which will help to increase their level of satisfaction. On the other hand, opponents believe that international trade will bring about disadvantages such as increasing competition which will hurt domestic firms and also affect employment rates. International trade takes place because different countries are productive in producing different groups. Two economic concepts involved in international trade will be absolute advantage and comparative advantage. Absolute advantage refers to the ability to produce more goods than another competitor. Comparative advantage refers to the ability to produce a good at a lower opportunity cost than a competitor. Countries will only engage in international trade when they are able to benefit. Hence, countries of different comparative advantage will trade to enjoy more of certain goods. The United States must place high tariffs and use quotas to restrict trade with foreign countries. There are many advantages and disadvantages......

Words: 618 - Pages: 3

Premium Essay

Xeco/212, Week 9, Final Project

...A New House – Decision University Of Phoenix XECO/212, Week 9, Final Project April 21, 2012 Catherine Higgins The decision to purchase a home is often the most important financial decision and individual or family will be faced with. The largest single financial purchase in an individual's lifetime is often the purchase of a house and one of the largest factors of personal wealth. All ten of the principles of economics are directly related to the decision to purchase a house on some level. These economic principles will have an impact on the purchasing decision and the long term financial aspects of home ownership so it is wise to incorporate these ten principles into the decision making process to ensure a sound financial decision is the outcome. When considering the purchase of a house, the ten principles of economics that need to be addressed can be broken down into three stages of the decision making process. The first step is to examine how the decision is made by incorporating the first four principles of economics which include, the trade off that comes with every financial decision, the real cost of any item or service is what is given up to get the item or service, rational people think at the margin, and people respond to incentives. Once it is clear how the decision is made, the next three principles of economics address how people interact with economics and include factors such as, trade is beneficial to everyone, markets......

Words: 1865 - Pages: 8