Econ 1

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Chapter 1 1. (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 i. Individuals will consider the benefits of attending college full time and the expected cost of doing so. A benefit of attending college full time would be that it has the potential to increase their wage or salary because of increased knowledgebase, network and skills. The expected cost to consider includes tuition, fees, books and wages that could have been earned by working instead if attending school full time. If the expected benefits of attending college full time outweigh the cost, then the rational person would choose to attend school. b. Whether to buy a new textbook or a used one ii. When deciding whether to purchase a new or used textbook, individuals will consider the expected benefits of purchasing the new book at a higher cost than the used book. These benefits include a higher resale value for when they’re done with it and the ease of not being confused my other students markings or note in the book. Unfortunately, the student would have to pay more out of pocket for the new book. If the expected benefits of purchasing a new textbook out weigh the cost, then the rational person would purchase the new textbook.

2. (Resources) To which category of resources does each of the following belong? c. A taxicab iii. Physical Capital (a manufactured item used to produce a service) d. Computer software iv. Physical Capital (a manufactured item distributed as a good) e. One hour of legal counsel v. Labor (requires human effort) f. A parking lot vi. Natural Resource and Physical Capital (land is the natural resource that the parking lot is on and has undergone…...

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