ps1new[1] - PS#1Solutions Chapter1 3.

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PS#1 Solutions Chapter 1 3. If you are thinking of going skiing instead of working at your part-time job, the cost of skiing includes  its monetary and time costs, which includes the opportunity cost of the wages you are giving up by  not working. If the choice is between skiing and going to the library to study, then the cost of skiing is  its monetary and time costs including the cost of getting lower grades in your courses. 4. If you spend $100 now instead of saving it for a year and earning 5 percent interest, you are giving up  the opportunity to spend $105 a year from now.   7. a. The provision of Social Security benefits lowers an individual’s incentive to save for retirement.  The benefits provide some level of income to the individual when he or she retires. This means  that the individual is not entirely dependent on savings to support consumption through the years  in retirement. b. Since a person gets fewer after-tax Social Security benefits the greater his or her earnings are,  there is an incentive not to work (or not work as much) after age 65. The more you work, the 
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This note was uploaded on 10/11/2011 for the course EC 101 taught by Professor Idson during the Spring '08 term at BU.

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ps1new[1] - PS#1Solutions Chapter1 3.

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