Economic Issues that Arise in the Decision to Get a Haircut - Essay Example

Task: Macro & Micro Economics Economic Issues that Arise in the Decision to Get a Haircut Decision-making is a continuous activity that individuals partake on a day-to-day basis. It is common for managers to make decisions when seeking solution to problems that face organizations in the corporate world. According to Ballestero and Romero (72), decision making is both a formal and a non-formal activity, since everyone does it with or without their knowledge. However, people make decisions with the objective of accomplishing a particular goal in mind. In life, making decision is not a choice but an obligation. The goal of the process for businesses is enhancing efficiency in operations. Furthermore, the process aids in analyzing issues from a financial perspective. This is because decisions made by managers have financial implications on the position of a business in the corporate world. People consider several factors before coming up with decisions in all circumstances. In a business settings, managers consult widely prior to coming up with a decision on a particular issue. Consequently, the person making the decision analyzes the short-term consequences of the decision prior to choosing a particular alternative. It is important to generate alternatives to chose when planning to make decisions. In order for one to choose to get a haircut, he should consider the factors involved such as the opportunity cost, gains of the trade and elasticity of the demand. Additionally, the person has to decide the place from where to get his haircut. For instance, the person will consider price as a critical factor in making the decision on the issues. After analyzing a wide variety of shops to choose from, the person will choose an alternative that suits his interest. As an individual makes the choice, the opportunity cost for cutting the hair should exceed the cost of leaving the hair long. Cutting the hair should provide trade benefits to the person making the decision. This means that a decision maker should consider the demand price elasticity especially its consequences. This is because analyzing the decision to make a haircut provides with it several challenges. For instance, the person just like a business manager has to focus on objectivity when analyzing the issues that lead to the decision. In making the decision, the person should note that the decision has both positive and unconstructive consequences depending on the process. Decision-making is the most critical process in business management because it determines profitability. The process also influences directions of operations for businesses. According to business managers, it is the central objectives in management. For the case above, the choice of the machine and the person to conduct the job are critical elements to consider when analyzing impacts of choosing to cut the hair from a business perspective. Consequently, competence of the barber, the barber’s attitude and time are critical in decision-making. Since the alternatives have several financial implications, the individual has to choose alternative that best suit his interest. According to economists, the need to satisfy the basic wants is the basis of decision-making. Interestingly, the satisfaction of one’ needs is not the end goal in itself since a decision leads to other needs. For instance, cutting hair in a particular way, will lead to the urge of dressing a manner that is appropriate to the haircut. Moreover, choosing a particular hairstyle signifies the position of an individual in the society. In modern society, several styles of haircuts have different connotations. The most dominant style resembles popular opinion in the society. Unique hairstyle on the contrary represents nouvelle ideas. The knowledge that different hairstyle espouse different meaning dictates choices in society. Given that many hairstyles are available, selecting one is a daunting task. To the young, shaggy haircuts is trendy and cool, whereas the old dislike the style. Teenagers prefer the style because its gives them an innocent look. Besides, the style is appealing to teenagers. The next category of haircuts is the buzz haircut that gives a cool and funky look. With all the haircut styles available, making a decision on the right choice is challenging. However, the decision maker should choose a hairstyle that conforms to his lifestyle (Jones 345). Additionally, the decision makers should consider risks associated with a particular hairstyle prior to making a decision. Opportunity Cost It is essential to address the opportunity cost when making decisions. According to the barber, the decision maker has to select an appropriate haircut style that reflects his stature in the society. Furthermore, the style should correspond to the price. In choosing a shaggy haircut for example, the person has to compromise on his stature in the society. The next action the person takes significantly determines the perception of others. It is usually advisable to evaluate the consequences of the choice prior to settling for one. People should consider the interest of the society in their decision since collective interest should override personal interest in decision-making. The price of the haircut style chosen is the opportunity cost for the activity forgone for the case above. Forgoing a particular style brings with it several benefits. However, a person chooses the style instead of seeking the benefits associated with forgoing the style. For instance, the money could have served some different purpose. Opportunity cost for a different hairstyle is the choice of the style chosen. The importance for the next available alternative is the value of the individual’s decision. In analysis, an effective decision is one made and not forgone. According to Jones (342), choosing a haircut is an economic is a necessity and falls within unlimited human wants The problem of opportunity cost would arise from the ability to use limited resources in satisfying the basic wants. For one to get a quality haircut, the person has to visit a competent barber. Furthermore, the person has to part with huge amounts of cash for the services. However, the person can look for the next available alternative by visiting a shop that offers similar services at an affordable cost. In this regard, the person seeking the haircut has to balance between getting quality and parting away with more cash or compromising on quality and remaining with some cash. In the last option, he will have to choose a barbershop that charges the least prices. In most cases, choosing an economically viable style is not advisable since cheap can be costly in the end. Gains from Trade Barbershops strive to maintain their position in the market by offering services that best suit the interest of the clients. In doing so, they tap into the potential of the market and as a result, they increase their profits. However, in certain circumstances they face difficulties in running their operations. This occurs in circumstances where clients have a wider variety to choose from when seeking services. In order to overcome such challenges it is mandatory for barbershops to provide the best quality for clients. This is because clients demand value for their money and they only make decisions they feel is economically viable. In essence, competition benefits clients in various ways. As noted by (Ballestero and Romero 76), customers attain gains of trade in places where competitions is stiff. Price Elasticity of Demand Price elasticity of demand describes the relationship between the rise in demand and the shift in price. In calculating price elasticity, an alternative that offers the best price and quality is the next available alternative. According to Ballestero and Romero (93), businesspersons believe in balancing the needs of the clients with their own since the degree for demand is a reflection of the expectation of customers. However, in both cases, changes are drastic and the price for products has huge significance on demand. For instance, a price elastic demand above one indicates appropriate elasticity. For the case of the haircut, prices are elastic, thus alteration for demand is high. On the contrary, in situations where the price elasticity is less than one, haircut services are inelastic. When hair services are inelastic, the demand has less influence on the change in price. In a situation where the price elasticity is one, haircut services have unit elasticity. The change in demand and prices is equal in occasion where price elasticity is one. The same applies to industries that manufacture goods. Economists use a vertical curve in explaining elasticity because a straight line connotes perfect elasticity. Conclusion Decision-making is an everyday process that involves everyone everywhere. Only decisions that are made in a wisely manner would generate appropriate results based on limited resources and unlimited wants. Rationality should play an important part during decision-making process, while economic issues discussed above should set the platform for making appropriate decisions. Works Cited Ballestero, Enrique and Carlos Romero. Multiple Criteria Decision Making and Its Applications to Economic Problems. New York ; London : Springer, 2010. Print. Jones, Trefor. Business Economics and Managerial Decision Making. Chichester : John Wiley & Sons, 2004. Print. Read More