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Chapter 1: Q 2 (page 14)
Some people claim that the “economic way of thinking” does not apply to issues such as health care. Explain how economics does apply to this issue by developing a “model” of an individual’s choices.
We develop the model by considering both the economic and the social behaviors involved in it.
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Why might the rationality assumption explain why even a chicken farmer who has absolutely no humanitarian concern for chickens might seek to maintain very comfortable conditions for the birds?
Which of the following predictions appear(s) to follow from a model based on the assumption that rational, self-interested individuals respond to
incentives?
(a) For every 10 exam points Myrna must earn in order to pass her economics course and meet her graduation requirements, she will study one additional hour for her economics test next week.
(b) A coin toss will best predict Leonardo’s decision about whether to purchase an expensive business suit or an inexpensive casual outfit to wear next week when he interviews for a high-paying job he is seeking.
(c) Celeste, who uses earnings from her regularly scheduled hours of part-time work to pay for her room and board at college, will decide to buy a newly released DVD this week only if she is able to work two additional hours.
Calculate the slope of the function you graphed in Problem A-5.
During her years of college, Dominique discovered that her three favorite subjects were astronomy, chemistry, and political science. She chose to major in astronomy because she had seen data indicating that science majors earn higher-than-average wages and because she liked astronomy better than both chemistry and political science. Upon graduation, however, she learned that average wages in chemistry fields were percent higher than average wages earned by astronomers. Did Dominique's behavior violate the rationality assumption?
Given the function , complete the following schedule and plot the curve.
| y | x |
| -4 | |
| -2 | |
| 0 | |
| 2 | |
| 4 |
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