I would like to discuss how people make decisions based on principle one, that is ‘People face trade-offs’ (Mankiw 2007, p.4). We often come to situations where we must sacrifice some choices to obtain better ones, whereby its benefits are often greater than its cost. Trade-offs occurs when we are forced to give up one thing in order to get something else due to some constraints. This also happens to the society when they face dilemmas between efficiency and equity. ‘Efficiency means that the society is maximising the benefits from the scarce resources whereas equity means the redistribution of benefits among the society’ (Mankiw 2007, p.5).
At a personal level, I had to make a choice between Monash University in Malaysia and University of Melbourne in Australia. I was facing a trade-off whereby I have to choose a right university to further my studies in the undergraduate program. I have to compare the advantages and disadvantages of each institution to make my final decision. If I choose Monash University in Malaysia, I will live at home and have a lower tuition cost. This would make the overall cost of education affordable. Besides that, employers tend to look for graduates with a better university background, and Monash University is currently rank 47th in the top 200 university in the world (THE 2009), so this would give a preliminary advantage after graduating from the university.
On the other hand, if I choose University of Melbourne, I would have to move to Australia for lodging and accommodation purposes. This would also provide me with a degree in business and commerce and gives me greater credibility when applying for job positions as the university is positioned at 37th in the world (THE 2009). However, the currency exchange of the Malaysian Ringgit for Australian Dollars prohibits me from going to Australia as it is very expensive. Besides that, leaving home may provide a less structured environment and this may require some time to adjust to a...