Principles which guide Individuals for making choices Concept Introduction: Micro-economics is the study of individual units, in particular, households, firms, to study their behavior in decision making and allocation of resources.

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Answer 1

Question

Chapter 1, Problem aWYWL

To determine

Principles which guide Individuals for making choices

Concept Introduction:

Micro-economics is the study of individual units, in particular, households, firms, to study their behavior in decision making and allocation of resources.

Expert Solution & Answer

Explanation of Solution

Principles are:

People must make choices b/c resources are scarce

In an economy, resources are limited and scarce to fulfill the wants of people. This is the basic problem in the economy, as people wants are unlimited and resources are limited in nature. Moreover, resources have alternative uses, due to which complexity in choosing what to produce becomes difficult.

The opportunity cost of an item, what you must give up in order to get it is its true cost

In an economy, since resources are scarce, and they have alternative uses, creates a problem in an economy of what to produce and how much. The solution can be obtained if the opportunity cost is taken into consideration.

For example, if a person books a ticket for a movie of $10 for the following day. The next day, rain starts, and he could not go. So, the opportunity cost is not only the amount of ticket but also the entertainment he would have had, after watching it.

So, the opportunity cost is the cost for the next best alternative foregone.

People face trade-offs:

In an economy, people have limited income to spend and resources to produce. They have to make choice of what is to be purchased with the budget constraint.

For example, if a person has $100, he has two choices, whether to purchase home theatre or buy books for his following academic year.

In the above example, two choices are available, so he has to give up one thing in order to purchase another. So, an individual always has the trade-off between income and resources.

So, the opportunity cost is the cost for the next best alternative foregone.

People respond to Incentive

In an economy, if people are given incentives, people have a tendency to purchase it.

For example, if $1000 is the rebate given to consumers for purchasing an efficient refrigerator, it would be an incentive for consumers to purchase it.

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M” method Given the following model, solve by the method of “M”. (see image)

As indicated in the attached image, U.S. earnings for high- and low-skill workers as measured by educational attainment began diverging in the 1980s. The remaining questions in this problem set use the model for the labor market developed in class to walk through potential explanations for this trend. 1. Assume that there are just two types of workers, low- and high-skill. As a result, there are two labor markets: supply and demand for low-skill workers and supply and demand for high-skill workers. Using two carefully drawn labor-market figures, show that an increase in the demand for high skill workers can explain an increase in the relative wage of high-skill workers. 2. Using the same assumptions as in the previous question, use two carefully drawn labor-market figures to show that an increase in the supply of low-skill workers can explain an increase in the relative wage of high-skill workers.

Answer 2

Question

Chapter 1, Problem aWYWL

To determine

Principles which guide Individuals for making choices

Concept Introduction:

Micro-economics is the study of individual units, in particular, households, firms, to study their behavior in decision making and allocation of resources.

Expert Solution & Answer

Explanation of Solution

Principles are:

People must make choices b/c resources are scarce

In an economy, resources are limited and scarce to fulfill the wants of people. This is the basic problem in the economy, as people wants are unlimited and resources are limited in nature. Moreover, resources have alternative uses, due to which complexity in choosing what to produce becomes difficult.

The opportunity cost of an item, what you must give up in order to get it is its true cost

In an economy, since resources are scarce, and they have alternative uses, creates a problem in an economy of what to produce and how much. The solution can be obtained if the opportunity cost is taken into consideration.

For example, if a person books a ticket for a movie of $10 for the following day. The next day, rain starts, and he could not go. So, the opportunity cost is not only the amount of ticket but also the entertainment he would have had, after watching it.

So, the opportunity cost is the cost for the next best alternative foregone.

People face trade-offs:

In an economy, people have limited income to spend and resources to produce. They have to make choice of what is to be purchased with the budget constraint.

For example, if a person has $100, he has two choices, whether to purchase home theatre or buy books for his following academic year.

In the above example, two choices are available, so he has to give up one thing in order to purchase another. So, an individual always has the trade-off between income and resources.

So, the opportunity cost is the cost for the next best alternative foregone.

People respond to Incentive

In an economy, if people are given incentives, people have a tendency to purchase it.

For example, if $1000 is the rebate given to consumers for purchasing an efficient refrigerator, it would be an incentive for consumers to purchase it.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 1, Problem aWYWL

To determine

Principles which guide Individuals for making choices

Concept Introduction:

Micro-economics is the study of individual units, in particular, households, firms, to study their behavior in decision making and allocation of resources.

Expert Solution & Answer

Explanation of Solution

Principles are:

People must make choices b/c resources are scarce

In an economy, resources are limited and scarce to fulfill the wants of people. This is the basic problem in the economy, as people wants are unlimited and resources are limited in nature. Moreover, resources have alternative uses, due to which complexity in choosing what to produce becomes difficult.

The opportunity cost of an item, what you must give up in order to get it is its true cost

In an economy, since resources are scarce, and they have alternative uses, creates a problem in an economy of what to produce and how much. The solution can be obtained if the opportunity cost is taken into consideration.

For example, if a person books a ticket for a movie of $10 for the following day. The next day, rain starts, and he could not go. So, the opportunity cost is not only the amount of ticket but also the entertainment he would have had, after watching it.

So, the opportunity cost is the cost for the next best alternative foregone.

People face trade-offs:

In an economy, people have limited income to spend and resources to produce. They have to make choice of what is to be purchased with the budget constraint.

For example, if a person has $100, he has two choices, whether to purchase home theatre or buy books for his following academic year.

In the above example, two choices are available, so he has to give up one thing in order to purchase another. So, an individual always has the trade-off between income and resources.

So, the opportunity cost is the cost for the next best alternative foregone.

People respond to Incentive

In an economy, if people are given incentives, people have a tendency to purchase it.

For example, if $1000 is the rebate given to consumers for purchasing an efficient refrigerator, it would be an incentive for consumers to purchase it.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 1, Problem aWYWL

To determine

Principles which guide Individuals for making choices

Concept Introduction:

Micro-economics is the study of individual units, in particular, households, firms, to study their behavior in decision making and allocation of resources.

Expert Solution & Answer

Explanation of Solution

Principles are:

People must make choices b/c resources are scarce

In an economy, resources are limited and scarce to fulfill the wants of people. This is the basic problem in the economy, as people wants are unlimited and resources are limited in nature. Moreover, resources have alternative uses, due to which complexity in choosing what to produce becomes difficult.

The opportunity cost of an item, what you must give up in order to get it is its true cost

In an economy, since resources are scarce, and they have alternative uses, creates a problem in an economy of what to produce and how much. The solution can be obtained if the opportunity cost is taken into consideration.

For example, if a person books a ticket for a movie of $10 for the following day. The next day, rain starts, and he could not go. So, the opportunity cost is not only the amount of ticket but also the entertainment he would have had, after watching it.

So, the opportunity cost is the cost for the next best alternative foregone.

People face trade-offs:

In an economy, people have limited income to spend and resources to produce. They have to make choice of what is to be purchased with the budget constraint.

For example, if a person has $100, he has two choices, whether to purchase home theatre or buy books for his following academic year.

In the above example, two choices are available, so he has to give up one thing in order to purchase another. So, an individual always has the trade-off between income and resources.

So, the opportunity cost is the cost for the next best alternative foregone.

People respond to Incentive

In an economy, if people are given incentives, people have a tendency to purchase it.

For example, if $1000 is the rebate given to consumers for purchasing an efficient refrigerator, it would be an incentive for consumers to purchase it.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 1, Problem aWYWL

To determine

Principles which guide Individuals for making choices

Concept Introduction:

Micro-economics is the study of individual units, in particular, households, firms, to study their behavior in decision making and allocation of resources.

Expert Solution & Answer

Explanation of Solution

Principles are:

People must make choices b/c resources are scarce

In an economy, resources are limited and scarce to fulfill the wants of people. This is the basic problem in the economy, as people wants are unlimited and resources are limited in nature. Moreover, resources have alternative uses, due to which complexity in choosing what to produce becomes difficult.

The opportunity cost of an item, what you must give up in order to get it is its true cost

In an economy, since resources are scarce, and they have alternative uses, creates a problem in an economy of what to produce and how much. The solution can be obtained if the opportunity cost is taken into consideration.

For example, if a person books a ticket for a movie of $10 for the following day. The next day, rain starts, and he could not go. So, the opportunity cost is not only the amount of ticket but also the entertainment he would have had, after watching it.

So, the opportunity cost is the cost for the next best alternative foregone.

People face trade-offs:

In an economy, people have limited income to spend and resources to produce. They have to make choice of what is to be purchased with the budget constraint.

For example, if a person has $100, he has two choices, whether to purchase home theatre or buy books for his following academic year.

In the above example, two choices are available, so he has to give up one thing in order to purchase another. So, an individual always has the trade-off between income and resources.

So, the opportunity cost is the cost for the next best alternative foregone.

People respond to Incentive

In an economy, if people are given incentives, people have a tendency to purchase it.

For example, if $1000 is the rebate given to consumers for purchasing an efficient refrigerator, it would be an incentive for consumers to purchase it.

Answer 6

Chapter 1, Problem aWYWL

To determine

Principles which guide Individuals for making choices

Concept Introduction:

Micro-economics is the study of individual units, in particular, households, firms, to study their behavior in decision making and allocation of resources.

Expert Solution & Answer

Explanation of Solution

Principles are:

People must make choices b/c resources are scarce

In an economy, resources are limited and scarce to fulfill the wants of people. This is the basic problem in the economy, as people wants are unlimited and resources are limited in nature. Moreover, resources have alternative uses, due to which complexity in choosing what to produce becomes difficult.

The opportunity cost of an item, what you must give up in order to get it is its true cost

In an economy, since resources are scarce, and they have alternative uses, creates a problem in an economy of what to produce and how much. The solution can be obtained if the opportunity cost is taken into consideration.

For example, if a person books a ticket for a movie of $10 for the following day. The next day, rain starts, and he could not go. So, the opportunity cost is not only the amount of ticket but also the entertainment he would have had, after watching it.

So, the opportunity cost is the cost for the next best alternative foregone.

People face trade-offs:

In an economy, people have limited income to spend and resources to produce. They have to make choice of what is to be purchased with the budget constraint.

For example, if a person has $100, he has two choices, whether to purchase home theatre or buy books for his following academic year.

In the above example, two choices are available, so he has to give up one thing in order to purchase another. So, an individual always has the trade-off between income and resources.

So, the opportunity cost is the cost for the next best alternative foregone.

People respond to Incentive

In an economy, if people are given incentives, people have a tendency to purchase it.

For example, if $1000 is the rebate given to consumers for purchasing an efficient refrigerator, it would be an incentive for consumers to purchase it.

Answer 7

Chapter 1, Problem aWYWL

To determine

Principles which guide Individuals for making choices

Concept Introduction:

Micro-economics is the study of individual units, in particular, households, firms, to study their behavior in decision making and allocation of resources.

Answer 8

Expert Solution & Answer

Explanation of Solution

Principles are:

People must make choices b/c resources are scarce

In an economy, resources are limited and scarce to fulfill the wants of people. This is the basic problem in the economy, as people wants are unlimited and resources are limited in nature. Moreover, resources have alternative uses, due to which complexity in choosing what to produce becomes difficult.

The opportunity cost of an item, what you must give up in order to get it is its true cost

In an economy, since resources are scarce, and they have alternative uses, creates a problem in an economy of what to produce and how much. The solution can be obtained if the opportunity cost is taken into consideration.

For example, if a person books a ticket for a movie of $10 for the following day. The next day, rain starts, and he could not go. So, the opportunity cost is not only the amount of ticket but also the entertainment he would have had, after watching it.

So, the opportunity cost is the cost for the next best alternative foregone.

People face trade-offs:

In an economy, people have limited income to spend and resources to produce. They have to make choice of what is to be purchased with the budget constraint.

For example, if a person has $100, he has two choices, whether to purchase home theatre or buy books for his following academic year.

In the above example, two choices are available, so he has to give up one thing in order to purchase another. So, an individual always has the trade-off between income and resources.

So, the opportunity cost is the cost for the next best alternative foregone.

People respond to Incentive

In an economy, if people are given incentives, people have a tendency to purchase it.

For example, if $1000 is the rebate given to consumers for purchasing an efficient refrigerator, it would be an incentive for consumers to purchase it.