Macroeconomics and managerial decision making essay

Essay on Decision Making Abstract Critical thinking and decision making go hand in hand to enable us to evaluate a situation, process the information and determine a course of action. The focus of this paper is to put both critical thinking and decision-making under the microscope for closer inspection to see how one compliments the other and how they are used in our professional and personal lives. In addition, the benefits of critical thinking are examined and whether or not these two elements are present in the company I work for, ACN Communications. Lastly, the nominal group technique will be explored as a means for problem solving.

Macroeconomics and managerial decision making essay

Economic models help managers and economists analyze the economic decision-making process. Each model relies on a number of assumptions, or basic factors that are present in all decision situations. Almost everyone in society engages in economic decision making at some point, from the billionaire investing in real estate, to the small business owner signing a contract with a supplier, to the teenager buying a video game or applying for a job; and these basic factors almost always come into play.

Working on a Budget Even the wealthiest individuals and organizations have a limited amount of capital resources to work with. The constraints of a budget influence nearly all economic decisions, since the sum of all expenditures should never exceed the availability of capital.

Cash availability is not always a direct limiting factor in economic decision making, since credit arrangements can allow people to spend more than they have.

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Even with credit purchase agreements, however, borrowers still take into account the ability to repay the debt over time, which brings the decision back to the issue of budgets and limited resources.

Maximizing Value The fundamental basis of economic decision making is individuals' or organizations' desire to maximize benefits while minimizing costs. This balancing act is referred to as maximizing value, and it is a skill that takes practice to master.

For individuals, value maximization decisions may include choosing between name-brand products and generic products, and choosing between small or bulk sizes. For a company, value maximization involves finding the lowest-cost suppliers that meet the company's quality standards, then determining the economic order quantity EOQ for each purchase.

Economic order quantity is the perfect amount of a product or material to order at a time, taking advantage of quantity discounts while also keeping holding and transportation costs under control. Rational Decision Making Nearly all economic models and theories have one irreconcilable flaw: While it is true that most people and organizations attempt to do this, the reality of economic decisions is slightly different.

Emotional theory in the stock market is a prime example of people's inability to make purely rational decisions on a consistent basis. Emotional theory states that everyone is influenced by his past experiences, expectations, emotional state and emotional memory when making a decision.

People can place too much emphasis on certain information, such as recent news or bad news, which can skew their rational decision making as well. Costs Versus Benefits Costs and benefits are key factors that all economic decision makers take into account.

Families, small business owners and others weigh the benefits and costs of decisions related to purchases, investments, sales and other expenditures before making a decision. This concept is similar to the idea of value maximization, with a distinct difference.

Cost-benefit analyses assume that for every decision, something must be gained and something must be lost. Even in investment decisions, there is an opportunity cost—the cost of not using the money in another way—that must be considered.

The goal of economic decision making is to make tradeoffs that allow you to gain more than you lose each time.Choose from different sets of final exam managerial economics flashcards on Quizlet. Log in Sign up.

final exam managerial economics Flashcards. Browse sets of final exam managerial economics flashcards. Study sets. Six steps to decision making.

Profit. main goal of management. Through the market structures simulation, examples on how decision-making differ among the market structures of monopoly, oligopoly, monopolistic competition, and perfect competition.

This simulation and the real-life scenarios detailed within, provide insight and understanding to the intricate decisions that are made in each type of market.

Macroeconomics and managerial decision making essay

Abstract—This paper focuses on managerial decision making under risk and uncertainty. Since no one, so far, has studied managers´ risk attitudes in parallel with their actual behavior when handling risky prospects the area still remains relatively.

A common approach to decision making is to create systems designed to support managers by making things more objective. Performance management is a perfect example where companies spend tons of money developing forms, processes, guidelines and checklists only to be disappointed with the results.

Economics for Managerial Decision Making - Assignment Example

Economics as a tool for decision making 1. Economics as a tool for decision making1) Opportunity cost principle:By the opportunity cost of a decision is meant the sacrifice of alternatives required by e.g.a) The opportunity cost of the funds employed in one‟s own business is the interest that could beearned on those funds if they have been employed in other ventures.

Macroeconomics Decision Business. Print Reference this. Disclaimer: How a Manager Use Macroeconomics for Decision Making. If you are the original writer of this essay and no longer wish to have the essay published on the UK Essays website then please click on the link below to request removal.

Macroeconomics and managerial decision making essay
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