CheckPoint: 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.
Consider the 10 Principles of Economics as outlined in Ch. 1 of the text.
Assume for this Check Point that purchasing a new home for you is a major decision requiring a substantial financial outlay where the wrong decision has long-term financial consequences.
Submit a 250- to 300-word response addressing the following points:
Which of the 10 principles do you think plays a major role in your decision?
Provide an example for each about decision-making, interaction, and the workings of the economy.
Explain how that influences the marginal benefits and marginal costs associated
with your decision to purchase a house.
The one principle that I think would play a major role in my decision to buy a house would be Principle 2: The Cost of Something Is What You Give Up to Get It. To make a decision I would have to compare the benefits of any alternative methods if any. In this case I would compare the purchase of a house to the rental of a larger apartment. I would have to compare the costs of the purchase of a house to the rental price of an apartment and take into consideration that the money going to rent is money thrown away and that I would never own the apartment. But an advantage of an apartment would be that if I can no longer afford the rent on that apartment I could move into a cheaper one. If I purchased a house and could no longer afford it because of the...
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