( Chapter 1 ) - 120 Words Minimum per question 1 . Discuss the impact of rationa
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Question
( Chapter 1 ) - 120 Words Minimum per question
1 . 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
( Chapter 2 ) - 120 Words Minimum per question
2. The United States is best described as having a “mixed” economy.
What are some elements of command in the U.S. economy? What are some traditional elements?
Explanation / Answer
1) Rational self interest refers to a action that elicit the most personal benefits. When an individual makes decision for himself it involves the considerations of factors like finance , satisfaction,overall return to oneself and not the society as a whole.It is assumed that :
a)We act rationally.
b) We act in our self interest
a. Whether to attend college full time or enter the workforce full time.
The very first aspect in this decision of an individual will be regarding the level of education. If the degree in college is meant to be too professional one , say for example an engineering degree it is worth to continue it . However the next ascpect would involve the decision of returns from the work and the education. Suppose the engineering course costs $ 500 and it takes 4 years to complete the course. After 4 years the salary that would be received as an engineer will be say $ 35000. Now if the opportunity cost of giving up engineering is higher , that is, if after class 12th a job worth $ 30000 is offered ,it is rational to go and work full time .One important factor here is regarding long term returns from both the decision . If working without a college degree is secured and that its salary would increase with years than only the decision should be to enter workforce fulltime.
. b)Whether to buy a new textbook or a used ones .
Taking decision in this case becomes quite easy. A book is meant to impart knowledge . All books do so no matter old or new.But there are certain aspects that make us to choose among the two. If a book is too old and does not have the revised contents , a new book is generally purchased. This is particularly applicable to practical subjects rather than literature books. From economic point of view , if the cost of old book and new book do not differ much people purchase the new book because of self satisfaction. A new book would be easily sold to others at a higher rate than the old version. However if someone is financially weak they go for old books even if the content is not revised. Thus all these factors are involved in making this decision.
c. Whether to attend a local college or an out-of-town college .
Various factors involve the decision to choose between attending a local college or an out of town college. The first would be the educational attainment and return from investment in education. If the local college do not offers any course that gives return ( that is employment ) people should prefer to go to out of town college. The second aspect is the cost-benefit analysis. If pursuing education from out of town is too expensive and that the employment so gained after the education givesvery less return or no returns at all, it is preferable to study at the local college. If there is ample job opportunity in the local town without much education qulification people may prefer to choose the local college.
2. The United States is best described as having a “mixed” economy.
What are some elements of command in the U.S. economy? What are some traditional elements?
The UNITED STATES economy is a mixed economy. It means that while most of the economic activity is controlled by individuals and the businesses , a significant percent( 25%) is controlled by the goverment.
FEATURES OF COMMAND ECONOMY :
FEATURES OF TRADITIONAL ECONOMY:
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