Economic Decision Making Flashcards, test questions and answers
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What is Economic Decision Making?
Economic decision making is the process of assessing and analyzing a range of economic factors in order to make decisions that are best for an organization. It involves considering different aspects such as cost, benefit, risk and return on investment. This type of decision-making is essential in any business setting where it can have a significant impact on the success or failure of operations.The most important aspect of economic decision making is understanding the implications associated with each option before committing to a particular course of action. This requires careful consideration regarding costs, potential risks and expected returns associated with the chosen solution. Additionally, it involves understanding how various external factors may influence outcomes and acting accordingly to manage these variables appropriately. Economic decision making should also take into account any applicable regulations or laws which could provide guidance on what solutions would be acceptable or beneficial in certain circumstances. Once all relevant information has been gathered, it must then be evaluated objectively from both financial and nonfinancial perspectives in order to reach an informed conclusion about which option will produce the greatest net gain for an organization over time. In many cases this evaluation process includes creating models for forecasting future market conditions based upon current data points as well as predicting how other actors within a given industry might react to certain scenarios if they were presented with them. Finally, after all necessary research has been conducted and considered appropriately, economic decision makers must commit to one specific outcome by weighing up pros and cons along with their own intuition about how successful each alternative choice could potentially be over time.