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ePack: Principles of Microeconomics 6th Edition by Gregory Mankiw
Edition 6ISBN: 978-1133150558ePack: Principles of Microeconomics 6th Edition by Gregory Mankiw
Edition 6ISBN: 978-1133150558 Exercise 1
Describe some of the trade-offs faced by each of the following:
a. a family deciding whether to buy a new car
b. a member of Congress deciding how much to spend on national parks
c. a company president deciding whether to open a new factory
d. a professor deciding how much to prepare for class
e. a recent college graduate deciding whether to go to graduate school
a. a family deciding whether to buy a new car
b. a member of Congress deciding how much to spend on national parks
c. a company president deciding whether to open a new factory
d. a professor deciding how much to prepare for class
e. a recent college graduate deciding whether to go to graduate school
Explanation
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(a)The money that could be spent on new car can be used for their spending on food, clothing, children's education family vacation expenses, savings etc.
(b) Member of congress will trade off with other important national expenses such as national defense, development of infrastructure, welfare schemes etc. when choosing to allocate its budget on building national parks.
(c) When the company wants to open a new factory, it will trade of with investment in other viable projects, meeting of operational expenses payment of cost of capital etc.
(d) When a professor is deciding how much to prepare for a class, he will trade off with time to be spent on his personal activities, research activities, and other preparations for co-curricular activities etc
(f) He faces a tradeoff between going to graduate school or to earn by taking a fulltime job. When he chooses to go to school he forgoes an opportunity to earn full time for a specified period of his course.
(b) Member of congress will trade off with other important national expenses such as national defense, development of infrastructure, welfare schemes etc. when choosing to allocate its budget on building national parks.
(c) When the company wants to open a new factory, it will trade of with investment in other viable projects, meeting of operational expenses payment of cost of capital etc.
(d) When a professor is deciding how much to prepare for a class, he will trade off with time to be spent on his personal activities, research activities, and other preparations for co-curricular activities etc
(f) He faces a tradeoff between going to graduate school or to earn by taking a fulltime job. When he chooses to go to school he forgoes an opportunity to earn full time for a specified period of his course.
ePack: Principles of Microeconomics 6th Edition by Gregory Mankiw
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