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Macroeconomics improve your World 3e By Karlan

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Solutions to End-of-Chapter Questions and Problems Review Questions 1. Suppose you are shopping for new clothes to wear to job interviews, but you’re on a tight budget. In this situation, what a ... re your wants and constraints? What does it mean to behave rationally in the face of scarcity? [LO 1.1] Answer: If you are deciding what to buy for a job interview, your want is to buy clothing that looks clean and professional, so you can present the best possible impression to potential employers. Your constraint is the amount of money you can spend on this clothing. A person behaving rationally would buy the nicest clothes they could afford. 2. You are a student with a demanding schedule of classes. You also work part time and your supervisor allows you to determine your schedule. In this situation, what is your scarce resource? How do you decide how many hours to work? [LO 1.1] Answer: Your scarce resource is time. You need both time to study and time to work. Presumably, you want to do well in school and also make money. You will try to balance your schedule so that you work as much as possible while still having enough time to study and do well in school. 3. Think about the definition of scarcity that you learned in this chapter. Name three ways that you confront scarcity in your own life. [LO 1.1] Answer: People face scarcity in many asp [Show More]

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