In microeconomics, individuals and households make choices about budget allocation based on needs and wants. Prioritizing essential needs when on a limited budget is essential, while non-essential items can be cut back or eliminated. Savings behavior varies across households based on income levels.
- In microeconomics, households and individuals make choices about how to spend their budgets based on their needs and wants.
- They consider the combination of goods and services that will best fit their needs and wants given their budget constraints.
- People also consider factors such as whether to work full-time or part-time and how much to save for the future.
- When living on a limited budget, it's important to prioritize essential needs such as food, shelter, and basic healthcare.
- These are the necessities that should be spent on first.
- Non-essential items can be cut back or eliminated to make up the gap between what is needed to live and what can be afforded within the budget.
- Savings behavior varies among households, with higher-income households generally saving a larger percentage of their income.
- This makes sense as they have more flexibility in their budget to allocate a portion to savings.
- On the other hand, lower-income households may find it harder to save due to limited resources and essential expenses.