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ECON MACRO 5th Edition by William McEachern
Edition 5ISBN: 978-1305659094ECON MACRO 5th Edition by William McEachern
Edition 5ISBN: 978-1305659094 Exercise 2
RATIONAL SELF-INTEREST Discuss the impact of rational self-interest on each of the following decisions:
a. Whether to attend college full time or enter the workforce full time
b. Whether to buy a new textbook or a used one
c. Whether to attend a local college or an out-of-town college
a. Whether to attend college full time or enter the workforce full time
b. Whether to buy a new textbook or a used one
c. Whether to attend a local college or an out-of-town college
Explanation
Verified
Verified
a. Prefer to attain college full time:
The benefit for a person in attaining a college for full time is that he/she will gain more knowledge by possessing higher degree; hence, he/she may get highly paid jobs in future. Whereas the cost is, he/she has to bear the expenses like tuition fees, books, and the earnings if the person works instead of studying.
If the cost of studying is greater than the benefit of study, then the person should work. If the benefit of the studying is greater than the cost of studying, then the person should study.
b. Buy new text books:
The content of the used book and the new book is same. The benefit derived from the old book is not being confused due to the marking of some other people who used that book. The cost of new book is higher than the cost of old book. If the expected benefit from the old book is greater than the cost of old book, then the person should buy the old book. Otherwise, it is better to buy new book.
c. Attain local college:
The college located in the town would have higher fee than the college located out of the town. On the other hand, students save more time if they study in the college tat located in the town. If the net expected benefit from the town college is greater than the net benefit expected from the college located output of the town, then the student should join in the college that located in the town. Otherwise, the students should join in the college that located out of the town.
The benefit for a person in attaining a college for full time is that he/she will gain more knowledge by possessing higher degree; hence, he/she may get highly paid jobs in future. Whereas the cost is, he/she has to bear the expenses like tuition fees, books, and the earnings if the person works instead of studying.
If the cost of studying is greater than the benefit of study, then the person should work. If the benefit of the studying is greater than the cost of studying, then the person should study.
b. Buy new text books:
The content of the used book and the new book is same. The benefit derived from the old book is not being confused due to the marking of some other people who used that book. The cost of new book is higher than the cost of old book. If the expected benefit from the old book is greater than the cost of old book, then the person should buy the old book. Otherwise, it is better to buy new book.
c. Attain local college:
The college located in the town would have higher fee than the college located out of the town. On the other hand, students save more time if they study in the college tat located in the town. If the net expected benefit from the town college is greater than the net benefit expected from the college located output of the town, then the student should join in the college that located in the town. Otherwise, the students should join in the college that located out of the town.
ECON MACRO 5th Edition by William McEachern
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