The purpose of this essay is to analyze my purchasing decision problem of both buying four books from Jarir Bookstore or Amazon, as well as applying economic concepts into my decision-making. The issue was deciding on which option that gave me the most value on taking a particular action, in other words the cost-benefit principle, where an action should only be taken, if and only if the benefits exceed that action.
Jarir Bookstore is situated in Kuwait. The store had only three out of four of the books that I wanted, however, the price of these three books were a little over 20KD. Nevertheless, the maximum amount I am willing to pay is 15KD for all four books. Furthermore, the transportation expenditure as well will be an overall of cost 23KD. As for Amazon, they had all four books that I wanted to buy; moreover all four books were a sum amount of 13KD, including handling and shipping costs.
However, the main issue of ordering the books off Amazon was the delivery pace, as it took seven days until the books arrive.
I decided to go with Amazon, as the benefits exceed my costs. However, the cost of purchasing at Jarir Bookstore exceeds my benefits. These benefits are in terms of expenditures. Jarir Bookstore is above to what I am willing to pay for, which is 15KD, which is known as buyerÃÂs reservations price. Thus, my (negative) economics surplus is 8KD; economic surplus is defined the gain that results from taking an action when the benefits outweigh the costs (Frank, Jennings & Bernanke, 2007). As a result, my economics surplus is the difference between my buyerÃÂs reservations price, which is the maximum amount I am willing to pay, against the total price of all books of either option. Hence, my...