A Major Purchase You Have or Will Make in Your Lifetime

A Major Purchase You Have or Will Make in Your Lifetime

Introduction

The core implication of economics in terms of purchase decision about the product comprises diverse conceptions that can be applied to the product that is purchased by the consumer. The product analyzed in this scenario is the purchase decision of BMW. This paper will analyze diverse economic implications such as marginal cost and benefit analysis to be applied on purchase decision; nonetheless, the paper will also focus on the domestic economy implications and international trade liability of the purchase decision of a BMW. The core economic implication on a particular product is the analysis of its demand and supply; however, this conception is accompanied with diverse economic allegations that affect the purchase decision.

The Principles Associated with the Purchase Decision

Economics is the science of economics began with the work of the Scottish philosopher and political economist Adam Smith (1723-1790), who described the “invisible hand” of free markets promoting the most efficient use of economic resources and creating wealth. By encouraging the individual economic self-interest of people, a nation prospered. Later theorists, such as the British philosopher and economist John Stuart Mill (1806-1873), expanded on Smith's work, explaining how the forces of supply and demand led to efficiency, and these ideas were central in what became known as classical economics. Classical economics supported the system of capitalism that had become dominant in Western Europe with the advent of the Industrial Revolution (Coleman, 2002, 89-97).

In case of purchasing a BMW, there are several factors that can be considered to associate with the purchase decision. BMW is counted as the luxurious product used for consumption that accompanies huge price associated with the product. Hence, the marginal analysis in scenario where BMW is purchased for the use by a consumer, its price is analyzed against the consumer satisfaction, social status and value added benefits associated with product consumption. Economics and Romanticism have common roots in Enlightenment moral philosophy and its quest to uncover the principles of human and social behavior.

Marginal Analysis of the Product

Marginal analysis represents the relations between marginal (i.e. small) increments or decrements of product quantities. Principally used in economics, but with applications elsewhere in the social and political sciences, it involves the application of differential calculus to the analysis of cost and benefit. The 'marginal principle' (held by some to denote an essential feature of rational conduct) holds that it is rational to proceed with the purchase decision of the product to the point where marginal benefits are balanced by marginal costs; use of this principle underlies much welfare economics (Coleman, 2002, 89-97).

In political theory marginal analysis is always important in situations where consumer's behavior is affected not by the actual quantity of armaments, goods, productive forces, but by the effect of increments and decrements. It seems plausible to suggest that in many areas (e.g. wages and food consumption), once above the level of subsistence, people are more affected by changes in the ...