Question: What Factors Affect Personal Financial Decisions?

Are opportunity costs relevant in decision making?

An opportunity cost is a hypothetical cost incurred by selecting one alternative over the next best available alternative.

Opportunity costs are relevant in business decision making.

In addition, companies commonly use them when evaluating corporate projects..

What are 2 economic factors that affect financial decisions?

Consumer prices. changes in how much the dollar is worth.Inflation. rising prices for goods and services and lower buying power of the dollar.Consumer Spending. … Interest Rates.Unemployment Rate.Personal Risk.Inflation Risk.Interest- Rate Risk.

What are the internal factors of decision making?

Internal factors that affect decision making include attitude, emotions, and ethics. Attitude is how you react when faced with making a decision. It is best to have a positive attitude because it often helps one see more options as well as make decision making easier.

What are three strategies that you can use to make better financial decisions?

Never make a quick decision. Though you may convince yourself you are thinking logically, you may not be. … Create a list of outcomes. Make sure to write down at least a couple of ways your decision can go wrong and how much money you could lose. … Change roles. … Get data. … Discuss the decision.

What are the opportunity costs associated with financial decisions?

Opportunity costs extend beyond just the monetary costs of a decision, but it includes all real costs of making one choice over another, including the loss of time, energy and a derived pleasure/utility.

How do financial choices impact the economy?

Your financial choices impact the economy because when you spend money, you are helping the economy. Having a job helps keep you from going bankrupt and helps you pay your bills. … Global economy impacts manufacturing the most in the U.S. Many jobs are given to other countries because they can be done for less.

What are some other possible expenses?

Fixed Expenses – Definition, Examples and ListsMortgage(s)Rent.Property taxes (if paying monthly)Strata fee / condo fee.House / tenant insurance.Utility bills (cable, cell, electricity, water, etc.)Lease / car loan payment.Vehicle insurance (if paying monthly)More items…

How does opportunity cost influence decision making?

In business, opportunity costs play a major role in decision-making. If you decide to purchase a new piece of equipment, your opportunity cost is the money spent elsewhere. Companies must take both explicit and implicit costs into account when making rational business decisions.

What factors influence your decisions?

Significant factors include past experiences, a variety of cognitive biases, an escalation of commitment and sunk outcomes, individual differences, including age and socioeconomic status, and a belief in personal relevance. These things all impact the decision making process and the decisions made.

How does social influence affect your decisions?

Behavior that is consistent with the authority influence hypothesis should be better described by the social influence model, which allows decision makers to give greater weight to the information that is inferred from the behavior of the higher ranked other person.

How does inflation affect financial decisions?

As inflation increases, the value of the investment diminishes, and the consumer ends up paying more for less because of the decreased value of the dollar. During times of high inflation, companies seem to be doing well because their revenue and earnings increase with the rate of inflation.

What is an example of an internal influence?

Internal influences are influences that a business has some control over, such influences include product, location, management, resource management and business culture. … If the goods being produced require certain equipment, these needs must be catered to so that the business may go on with its production.

What are the internal factors that affect an organization?

Some examples of areas which are typically considered in internal factors are:Financial resources like funding, investment opportunities and sources of income.Physical resources like company’s location, equipment, and facilities.Human resources like employees, target audiences, and volunteers.More items…•

What are the internal and external factors affecting decision making?

Organizational environment denotes internal and external environmental factors influencing organizational activates and decision making….Elements of the General External EnvironmentPolitical factors.Economic factors.Sociocultural factors.Economical factors.Legal factors.(Natural) Environmental factors.