homework assignment 1- chapter 1

homework assignment 1- chapter 1 - Federal Affairs and so...

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Colleen Clancy Macroeconomics May 12, 2009 Homework Assignment #1- Chapter 1 Problems 1-4 1. a. The family deciding whether to buy a new car needs to take into account the trade-offs in their purchase. The family could take into consideration their savings; the purchase of a new car will take away from the total amount of money the family has to save for their children’s education, or family vacations, or entertainment. This purchase might mean one less vacation or less money available to spend on clothes or on take-out. b. When a member of Congress decides how much to spend on national parks, he or she must consider the tradeoffs that accompany the decision. If the money is spend on national parks, then there is less money available for the government to grant to different sectors such as the Treasury Department, the Department of Health and Human Services, the Department of Defense, and the Department of
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Unformatted text preview: Federal Affairs and so on c. As the president of a company, it is a tough decision to decide to open a new factory or not. To make this choice, the tradeoffs need to be accounted for. If the new company is opened, there would be a long delay until the profit from the new company hits the break-even point to cover the expenses of building the new company. The tradeoff would then be more about making money in the short run rather than opening a new company which would create profits in the long run. . d. When a professor decides how much to prepare before a class, he or she faces a tradeoff. The professor would give up leisure time to prepare for the class. Leisure time could include anything from taking a nap, or playing a round of golfeither way the professor faces a trade-off when deciding how to manage his or her time....
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