Class Assignment 2.docx - Jennifer Sosa Econ 201 Class...

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Jennifer SosaEcon 201Class Assignment 2Review1.Ahmed is considering buying a particular sweater. The price of the sweater is lowered by20%. This willincrease/decreaseAhmed’sbenefit/cost. This will make himmore/lesslikely to buy the sweater.Benefit: Utility; emotional satisfaction from the sweaterCost: What you sacrifice; $$$If utility is less than the cost, he won’t buy the sweater.If utility is greater than the cost, he will buy the sweater.If the sweater becomes more valuable, utility goes up.If the price falls, cost goes down.
2.According to economic theory, people will make decisions by weighing the additionalcosts and benefits of small changes in their behavior. This is called:
3.People’s tendency to think about their choices and act in their own self-interest is called:
4.Company X can produce a hat for $4. Company Y can produce it for $6. Does company

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Term
Spring
Professor
NoProfessor
Tags
Economics, Ahmed, Jennifer Sosa, price of the sweater

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