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How People to Make Choices between Housing and Other Wants by Using Opportunity Cost Approach - Research Proposal Example

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The paper analyzes how a consumer makes a choice between the needs of housing and his or her other needs. This analysis can be conducted in a better way if the process of making the choice between the type of housing and other wants is explained by applying the concepts of opportunity costs…
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How People to Make Choices between Housing and Other Wants by Using Opportunity Cost Approach
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Download file to see previous pages In the words of microeconomics, it can be said that every consumer faces a budget constraint while making a decision regarding purchases of required commodities or services.  It is known that the more one consumes, the better he is. The utility of a rational human being always gets enhanced with the level of consumption. There is no doubt that if a consumer is able to buy everything that he or she wants by the amounts adequate enough to fulfill his or her desires, then he or she would receive a very high amount of ratification. But in practice, an individual is constraint by his or her given resources and he or she has to make a wise decision regarding his or her consumption choice in such a way that his or her utility is maximized. (“Scarcity and Choice in Resource allocation”, n.d.; Dolan and  Lindsey, 1991)

Since needs are infinite, given the income constraint it will not be possible for a consumer to fulfill all the needs the way he or she would have done under no constraint situation. Human beings always want to have a better quality of life by consuming better food, better housing, better transport and communication, better health facilities and better educational opportunities.  But under scare resource conditions, a consumer is required to rank his or her priorities on the basis of the extent by which he or she needs each of the commodities or services available in the market. The aim of a consumer when he is constraint with inadequate resources and infinite needs is to fulfill those needs first as well as adequately which he or she needs or wants most. In fact, very often people need to make trade-offs between different types of choices at the time of his or her decision-making process. The term ‘trade-off’ implies that if a consumer chooses to consume one particular commodity or service by more amounts then he or she will have o give up or reduce the level of consumption of some other commodity or service in exchange as resources are limited. ...Download file to see next pagesRead More
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