Problem Set 1(CH1).docx - Problem Set(Ch1 Kwong Wing Kai 20513986 Question For Review Q3 It depends on different situations the marginal benefit would

Problem Set 1(CH1).docx - Problem Set(Ch1 Kwong Wing Kai...

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Problem Set (Ch1) Kwong Wing Kai 20513986 Question For Review Q3. It depends on different situations, the marginal benefit would be large when a person is extremely thirsty and walking in the desert, as the desire of water to the person will become larger than normal situation. However, the marginal benefit would be small when a person after drinking a lot of water. Problems And Application Q2. In terms of the psychological perspective, although the costs of vacation are in dollars, in fact the costs in dollars transfer from the psychological costs, as ‘I’ have to work very hard to earn the salary. Therefore, ‘I’ can compare the psychological benefits of vacation with the psychological costs of working. Q5. The fact that you have already sunk $5 million is not relevant to your decision anymore, because that money is gone. What matters now is the chance to earn profits at the margin. If you spend another $1 million and can generate sales of $3 million, you’ll earn $2 million in marginal profit, so you should do so. You are right to think that the project has lost a total of
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