Google
Saturday 
November 9, 2024 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
AMORTIZATION: The process of paying off a debt liability and accrued interest through a series of equal, periodic payments. Car loans and mortgages are two debts commonly paid off through amortization. Your monthly car payment, for example, partially pays for interest accrued on the outstanding balance and partly reduces that balance. Because one payment reduces the outstanding balance, each subsequent payment has a smaller portion for interest. If the proper amortization schedule has been calculated, your loan will be paid off with the last payment.

Visit the GLOSS*arama


ECONOMIC THINKING:

A way of looking at and analyzing the way the world works by comparing the cost of an action with the benefit generated. The study of economics is the process of economic thinking about issues related to the scarcity problem.
The need for economic thinking is a direct result of the scarcity problem, which exists due to unlimited wants and needs, but limited resources. Scarcity means that virtually all actions incur an opportunity cost. Identifying the cost of an action, no matter how hidden or subtle it may be, is the essence of economic thinking.

Cost and Benefit

Suppose, for example, that Alicia Hyfield, an average everyday run-of-the-mill college student, is contemplating the purchase of a new computer. Economic thinking suggests that a comparison between the cost of the computer and the benefit derived from using it are in order.

The cost includes out of pocket expenses (purchase price, taxes, shipping charges) as well as Alicia's time and effort (driving to the store, setting up the computer, learning the programs). The benefit includes improved grades, a better education, and even the enjoyment of playing video games. Economic thinking poses the question: Does the benefit of the purchase justify the cost? If Alicia makes the purchase, economic thinking implies she has decided that the benefit exceeds the cost.

An Economic World

The study of economics is essentially the process of economic thinking about assorted economic phenomena, such as production, consumption, market exchanges, and a host of other topics too numerous to list here. However, closer inspection reveals that most aspects of human existence, many that might not seem like economic phenomena, can also be subject to economic thinking.

Suppose, for example, that Alicia Hyfield is also contemplating the upcoming Shady Valley Mayoral election. Should she vote for the incumbent Mayor Victor Thurgood or the challenger Roland Nottingham? Economic thinking results when Alicia evaluates the cost and benefit of voting for each candidate.

  • Mayor Thurgood has proposed constructing a new park with a jogging track. Alicia likes to jog.

  • Roland Nottingham has suggested that a new tax on left-handed people would raised needed revenue. Alicia is left-handed.

  • But Mayor Thurgood also wants to reduce environmental regulations. Alicia has asthma and suffers when air pollution is high.

  • Then again Roland Nottingham is a strong advocate of education and an alumnus of the Ambling Institute of Technology. Alicia is a student at the Ambling Institute of Technology.
Voting, crime, marriage, studying, and a number of other human activities, can also be subject to economic theory. What is the anticipated cost and benefit of robbing a convenience store? What is the anticipated cost and benefit of proposing marriage? What is the anticipated cost and benefit of preparing for an upcoming exam?

Virtually every decision made by a human being results in cost and benefit, and is thus subject to economic thinking. In fact, most people engage in such economic thinking even without formal economic training.

<= ECONOMIC SYSTEMECONOMICS =>


Recommended Citation:

ECONOMIC THINKING, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: November 9, 2024].


Check Out These Related Terms...

     | economic analysis | positive economics | normative economics | dismal science | incentive | opportunity cost |


Or For A Little Background...

     | scarcity | economics | economy | seven economic rules | three questions of allocation | efficiency |


And For Further Study...

     | consumer sovereignty | mixed economy | economic goals | mixed economy | macroeconomics | microeconomics | political views | four estates | production possibilities | circular flow | business cycles | short-run production analysis |


Related Websites (Will Open in New Window)...

     | American Economic Association |


Search Again?

Back to the WEB*pedia


APLS

YELLOW CHIPPEROON
[What's This?]

Today, you are likely to spend a great deal of time at a garage sale trying to buy either a replacement washer for your kitchen faucet or a stretchable, flexible watch band. Be on the lookout for jovial bank tellers.
Your Complete Scope

This isn't me! What am I?

General Electric is the only stock from the original 1896 Dow Jones Industrial Average remaining in the current index.
"Laughter is the shortest distance between two people. "

-- Victor Borge, musician, humorist

AMW
Average Monthly Wage
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2024 AmosWEB*LLC
Send comments or questions to: WebMaster