homework_1_solutions

homework_1_solutions - Problem Set 1 Answer key Problem 1 a...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Problem Set 1. Answer key. Problem 1 . a) Rationality => prefer more to less of a good thing b) Individual because government decisions are heavily influenced by the bargaining process and the competing interests of many constituencies. c) i) because we don’t know everything = lack full info ii) risk = (cost of bad outcome)*(probability of a bad outcome) iii) market participants set the probability of a bad outcome = 0 d) rationality => want the most of a good at the least cost Problem 2. a) micro = study of individual consumers, firms, and markets. (e.g. = pricing of cars, presence of competition in markets or not, etc.) macro = study of the entire economic system and how government is involved in the economy to promote certain economic goals. (e.g. government budgeting, and/or market regulation, how to deal with inflation and/or unemployment, etc.) b) micro – households, firms, consumers, industry macro – consumption, investment, government (consumers and business in aggregate) and the foreign sector c) marginal is best because at each
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern