Economica Case

Chapter 1:

P&A 2: The marginal cost for going on vacation is far cheaper than the physiological refresher that you get in the marginal benefit for being away from reality. Being away allows you to clear you mind and gain a greater marginal benefit than the marginal cost of the vacation.

P&A 5: Considering the $5M "water under the bridge" therefore; absolutely yes, continue with the development of the new product. However, you shouldn't spend more than the 3M that you expect in sales.

P&A 8: Using the principle, "Trade can make everyone better off" more than likely your chores will take less time because each person will be able to focus and optimize their process. By optimizing the process of simple household chores it is similar to how countries specialize and optimize to be able to create their products cheaper and at a better price. Also, you will be able to share the workload and it makes each person more incentivized to continue the roommate relationship with a sense of equality of household duties.

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Chapter 2:

QFR 6: Milk

1,000

500

1,800 2,000 Cookie

**If ½ the cows are killed from disease then the opportunity cost of cookies goes up!

With no specific ratio of milk to cookies it takes many cows to make enough milk to produce and sell; while with cookies it takes many smaller quantities of ingredients to create cookies and the death of cows from disease will greatly affect the production of milk rather than cookies.

QFR 7:

Product A

Product B

Using the PPF will allow us to find the equilibrium of efficiency. By finding all the inefficiencies it allows adjustment of the slope to determine the most efficient production of each product.

QFR 9: According to the text, "Positive and Normative statements are functionally different. " Positive Statements describe a relationship and state how the work truly is. Rather than Normative Statements are value judgments and claim how the world should be.

POLLY: Healthcare Reform lowers the cost of Physician reimbursement.

NORM: Healthcare Reform should increase the quality of patient care.

P&A 1:

Marketplace $1 $30

Service

Workplace Selena

Business Shanna

Stuart

$4.50 $10K Sally

P&A 4:

Mowing Lawns

A D

C

B Washing Cars

#C: D, has an equal efficient shape because with Larry equally good in both activities and then Moe and Curly working in there specialty