Choice and Rationale Decision Making

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Table of Contents

Introduction
Main Body
Conclusion
References

Introduction

The study of economics assists individuals and organizations in making the right choices regarding the available alternatives. In any action about the making of the precise decision, hardly would one find a single alternative. In making a decision, one has to ensure the best choice that optimizes one’s needs and wants is critically selected. It is an observable trend that most resources employed in producing goods and services are generally scarce. This subsequently compels the producers to make a prudent decision concerning the allocation of resources. The major aim of economic analysis is to ensure resources are channeled to resourceful projects. This denotes that maximum utilization of available resources should lead to the minimization of costs while at the same maximizing the benefits or value realized from the utilization of such resources. Efficiency is achieved at the point where an organization or individual has extremely reduced the costs of production and maximized benefits about production. The world resources are getting smaller in size, forcing most producers to aim at efficiency. Noticeably, the possibility production curve has gained popularity in its effective application in rational decision-making.

Main Body

Many individuals ranging from small organizations to nations find the model more realistic and practical. The approach helps in deciding the employment of resources in the production of two goods or services. Channeling more resources in the production of certain products results in a reduction of resources channeled to the production of the alternative product. However, the total amount might reduce if the resources are underutilized. On the other hand, individuals or organizations can produce products beyond the frontier if the level of technology is raised in the production process. The increase in resources such as capital may as well result in production level beyond the production frontier (Rittenberg & Tregarthen, 2009).

This paper will attempt to analyze the benefits and costs associated with education as well analyze the comparative advantage associated with a country’s processes of production.

Education is today perceived as an important aspect of any economy that aims at growing at the same pace as other economies. However, education requires many resources that sometimes force the government to intervene in the education system. The kind of education offered differs across diverse countries as well as localities. Although the education system differs in several features, all learning institutions have a common purpose of instilling knowledge to their citizens that may assist in solving logical problems we often face in our daily life. It also facilitates generalizing ideas, which may turn out to be fundamental for economic decisions. Commonly, education assists in increasing one’s human capital. Human capital is a pertinent factor of production for any commodity or service. An example of human capital may be in form of entrepreneurship. According to Rittenberg and Tregarthen (2009), an entrepreneur needs to develop inventive and innovative skills regarding the operation of any kind of business enterprise. This means he/she should be equipped with analytical skills to enable him to comprehend and analyze the economic trends for better decision making. All this requires a good background of education at the primary level as well as advanced level. Effective entrepreneurship will facilitate efficiency in the production of goods and services. Not only does it facilitate efficiency at one’s business but also when employed. The employer needs an individual with skills in a certain area consequently facilitating effectiveness and efficiency. The essential skills include making a wise choice when confronted by two alternatives. A solid background in the analysis will eventually lead to a rational decision that enhances the benefits and value of an organization (Frank, 2005).

A deep insight into available opportunities can be made concerning the tuition fee as well as time spent at the college level. Several alternatives avail although education is perceived to be more important. Education assures one of superior salary in future. This forces one to forego other available opportunities to choose education. The second-best alternative that can be foregone to choose education is the choice of attending a driving college for a short period and later on working as a truck driver. This could save time and a huge amount of money spent at school. As it can be noted, the foregone opportunity at this point represents an opportunity cost. Time and money spent at the driving school will be less as compared to what will be spent at the college. However, one has a high tendency of earning a handsome salary after he/she is through college (Schenk, 2009).

In several types of research, it has turned out that in many instances decrease in trade barriers enables a country to shift outward the possibility production curve. A country will be able to access new technology, capital, and labor which enhances the level of production. For instance, globalization occurred because of the reduction in the level of barriers that were put across several countries. This has consequently led to specialization as countries only concentrate on what they can produce efficiently using the available scarce resources. It is no doubt that some resources are efficient in producing certain goods or services. With the knowledge of specialization, one can denote that a country stands a high chance of producing a greater amount of goods and services compared to the economy engaged in the production of various products using the same amount of resources and technology. Trade barriers also facilitate a large market for any country’s commodity. This encourages more production through optimal utilization of its resources. To produce beyond the possibility production frontier, any economy should employ several fundamental policies. For instance, it is practical for a firm or country to achieve a high production level if it employs current technology in its mode of production. The technology ensures efficiency and effectiveness that at most reduces the costs and maximizes the value of the production processes. An economy may as well increase the production level through the increase of capital and human capital in production. In addition, further production levels might be realized through maximum utilization of the available resources (Rittenberg & Tregarthen, 2009).

Noticeably, comparative advantage plays a pertinent role in any country’s economy. A country attempts to find the area that is efficient and effective for its methods of production. A country may have an advantage in the production of a certain commodity over the other because of adequate resources, cheap labor, or availability of advanced technology as regards the production of a certain commodity. The efficiency enables a state to produce quality goods cheaply. This will as a result enable the country to sell the product at a greater profit due to a wider margin between costs and benefits. It will as well access the large market where products from other countries are sold at a cheap cost as compared to the costs a country would incur if it were produced locally. In the end, the trading nations will experience high living standards, as they can access cheap goods and services from the trading partners. Similarly, a country gets a wide market for its specialized products (Rittenberg & Tregarthen, 2009).

Conclusion

Choices are fundamental in any economic decision-making since resources are scarce. The resources, on the other hand, do not result in the maximum production of certain commodities. This, therefore, calls for a wide and comprehensive analysis of various alternatives that are available for one to pursue. For an organization to choose a viable alternative, it should deeply examine the costs and benefits associated with such an alternative. However, other factors such as technology and human capital have to be put into consideration while selecting an alternative that optimizes the level of benefits. Generally, a country should emphasize specialization since it lowers the cost of operation while ensuring efficiency is maintained.

References

Frank, R. (2005). The opportunity costs of economics education. Web.

Rittenberg, L. & Tregarthen, T. (2009). Principles of microeconomics. California, CA: Flat World Knowledge Inc.

Schenk, R. (2009). Welcome to economics. Web.

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Choice and Rationale Decision Making

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