I would like to discuss how people make decisions based on principle one, that is â€˜People face trade-offsâ€™ (Mankiw 2007, p.4). We often come to situations where we must sacrifice some choices to obtain better ones, whereby its benefits are often greater than its cost. Trade-offs occurs when we are forced to give up one thing in order to get something else due to some constraints. This also happens to the society when they face dilemmas between efficiency and equity. â€˜Efficiency means that the society is maximising the benefits from the scarce resources whereas equity means the redistribution of benefits among the societyâ€™ (Mankiw 2007, p.5).
At a personal level, I had to make a choice between Monash University in Malaysia and University of Melbourne in Australia. I was facing a trade-off whereby I have to choose a right university to further my studies in the undergraduate program. I have to compare the advantages and disadvantages of each ...view middle of the document...
However, the currency exchange of the Malaysian Ringgit for Australian Dollars prohibits me from going to Australia as it is very expensive. Besides that, leaving home may provide a less structured environment and this may require some time to adjust to a new environment.
After comparing the trade-offs between the two universities, which are the quality of education and the cost of education. In order to get one thing that we want we usually have to give up something else that we want. Thus, I made my choice of doing my undergraduate in Monash University in Malaysia.
This also applies to other figures of the world. One of the figures is Barack Obama, the President of The United States. As the president, he has made a decision on cutting the war cost to $140 billion this year (Bohan, C. & Mason, J. 2009), which is half of the usual amount for the past few years. This was done due to the economic recession and the extra funds are to be allocated to other parts of the development of the country. The President also faced trade-offs between a few choices, either funding the welfare of the people or the continuation of the war in Iraq and Afghanistan (Colvin 2009).
Overall, everyone continuously face trade-offs in their everyday life. So, it is wise to constantly compare between choices and make the best decision as we often come to situations where we must sacrifice some choices to enable us to obtain benefits that are greater than its cost.
Bohan, C. & Mason, J. 26 Feb. 2009, â€˜Obama sees war costs totalling $140 billion this yearâ€™, Reuters [Online]. Available: http://uk.reuters.com/article/UKNews1/idUKTRE51P2DO20090226?sp=true [Accessed 7 Mar. 2009]
Colvin, R, 4 Mar. 2009, â€˜Obama takes aim at costly U.S. defense contractsâ€™, Reuters [Online]. Available: http://www.reuters.com/article/vcCandidateFeed7/idUSN04407906 [Accessed 7 Mar. 2009]
QS Top Universities 2009, QS World University Rankings (2008), Times Higher Education (THE), viewed 7 March, 2009,
Mankiw, NG, 2007, Principles of Microeconomics, 4th edn, Thomson Higher Education, Ohio, USA.