, Chapter 01 - Economics and Life
CHAPTER 1
ECONOMICS AND LIFE
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 are 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 aspects of their lives. Some people love to travel and
explore new places, so they face scarcity in both time and money that keeps them from
traveling as often as they would like. Others face scarcity in their professional life, in that
there are often many worthwhile projects to address, but the available resources are limited in
terms of employees, time, and budget.
4. When shopping for your interview clothes, what are some trade-offs you face? What is the
opportunity cost of buying new clothes? What are the benefits? How do you balance the two?
[LO 1.2]
Answer: The money you spend on clothes for a job interview could be spent on other things
instead, so it is one opportunity cost. Another opportunity cost is the time you spend
1-1
© 2021 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
CHAPTER 1
ECONOMICS AND LIFE
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 are 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 aspects of their lives. Some people love to travel and
explore new places, so they face scarcity in both time and money that keeps them from
traveling as often as they would like. Others face scarcity in their professional life, in that
there are often many worthwhile projects to address, but the available resources are limited in
terms of employees, time, and budget.
4. When shopping for your interview clothes, what are some trade-offs you face? What is the
opportunity cost of buying new clothes? What are the benefits? How do you balance the two?
[LO 1.2]
Answer: The money you spend on clothes for a job interview could be spent on other things
instead, so it is one opportunity cost. Another opportunity cost is the time you spend
1-1
© 2021 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
