Chapter 1 - Chapter 1 Thinking Like an Economist Q. 1, 5, 7...

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Chapter 1 Thinking Like an Economist Q. 1, 5, 7 Q. 3, 9 Please see under “Answers” from the  tutorial weekly schedule
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Problem #1, Chapter 1 The most you would be willing to pay for  having a freshly washed car before going  out on a date is $6. The smallest amount  of which you would be willing to wash  someone else’s car is $3.50. You are  going out this evening, and your car is  dirty. How much economic surplus would  you receive from washing it?
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Solution to problem #1 (1) In Economics, we always assume rationality For example, you will pay $3500 for a new mobile phone  because you think the new mobile phone is worth at least $3500  or the new phone will potentially bring you happiness or  enjoyment that is worth at least $3500 The first line says the most you would be willing to pay for a car  wash is $6 $6 is actually your benefit of having a washed car You pay $6 for a car wash because you think the service is  worth $6; you wont pay $6 for a type of service that you think is  only worth $5
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Solution to problem #1 (2) The question also says the smallest amount for  which you would be willing to wash a car for  someone is $3.5 $3.5 is actually your cost for performing a car wash for  someone else $3.5 is just right at compensating for the value of your  effort and time spent on the car wash You would be happy if someone pays you more than $3.5 
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This note was uploaded on 10/08/2009 for the course BSC econ1001 taught by Professor Titi during the Spring '09 term at Brandon.

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Chapter 1 - Chapter 1 Thinking Like an Economist Q. 1, 5, 7...

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