1. Answer in at least 3 paragraphs:Question:
A single mother of one child is working 2 daus a week for $60 a day and thinking about increasing her work to 3 day. Discuss (a) how scarcity, choice and opportunity cost apply to this situation, and (b) how she can make a rational decision about this issue, referring especially to the marginal benefit and marginal cost.
To increase your mark, define the concepts involved, add diagrams to your answers and give (more) examples.我大概都知個concept既...不過點可以答好d ?
My answer:
1a). Scarcity is the situation where resources are insufficient to satisfy all our wants. Due to limited resources yet unlimited wants, choices of alternative uses of scare resources are subjected to certain constraints, so everyone tends to maximize their benefits under constraints. This can be explained by the theory of constrained maximization.
In this case, time constraint is the scare resources that the single mother faces. Since everyone has only 24 hours a day, she can only do a particular thing, for example, to take care her child, to work or to meet her friends, in a specific period of time. So she has to make maximization choices subjected to time constraint. This is related to the opportunity cost concept. Opportunity cost is defined as the highest-valued option forgone due to an act. Now, if the mother chooses to increase her work to 3 days a week , then she has to sacrifice the time for doing other thing else, such as taking care her child and meeting her friends. Hence, the opportunity cost will affect her choices.
1b). She can make her decision rational by weighing the costs and benefits of this issue. Her marginal benefit here is he extra money working for one more day, while her marginal cost is fewer time to take care her child, fewer time to chat with her friends, more exhausted, etc. it is worthwhile for her to increase her work to 3 days, if the value of marginal benefit is greater than the marginal cost. If not, she should remain working 2 days a week.
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