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Chapter 1: Problem 23

If you found \(\$ 10\) bills on the sidewalk regularly, we might conclude that individuals don't try to maximize net benefits. Do you agree or disagree with this statement. Explain your answer.

Short Answer

Expert verified
Disagree. Occurrences of finding $10 bills regularly on the street do not necessarily imply that individuals do not try to maximize their net benefits. It may be attributed to a host of other factors excluding regular and conscious disregard for benefits.

Step by step solution

01

Understanding the Statement

The first step is to understand the scenario and the claim made. The scenario talks about finding ten dollars bill regularly on the sidewalk, and then it claims that this scenario would suggest that 'individuals do not try to maximize their net benefits'. There is an implied assumption here that if everyone was maximizing their net benefits, then there would be no $10 bills found on the ground regularly.
02

Unpacking the concept of maximizing net benefits

Maximizing net benefits operates on the premise that individuals aim to increase their gains (benefits) and minimize their losses (costs). In the event someone loses a $10 bill, it could either be due to the accidental loss or it could stem from the fact that the cost of securing the $10 bill (in terms of time, efforts etc) exceeds the benefit they derive from it. It is also possible that the person was not aware of the loss. This is not necessarily a reflection of individuals not wanting to maximize the net benefit.
03

Drawing the conclusion

Given these possibilities, finding $10 bill regularly on the street doesn't necessarily lead to the conclusion that individuals do not try to maximize their net benefits. Instead, it more reasonably suggests that individuals might not always be successful in their attempts to maximize benefits due to unpredictable scenarios like accidental loss, lack of awareness, or other factors beyond their control.

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