Chapter 1: Q 2 (page 13)
Under the rationality assumption, could a woman potentially take into account her family's welfare as well as her own when considering having another child? Explain your reasoning.
Yes, it can be considered as the rationality assumption takes into consideration every possible choice.
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How might Figure support the argument that higher incomes associated with greater levels of educational attainment provide an incentive for women to have more children?
Consider the following statements, based on a positive economic analysis that assumes that all other things remain constant. For each, list one other thing that might change and thus offset the outcome stated.
(a) Increased demand for laptop computers will drive up their price.
(b) Falling gasoline prices will result in additional vacation travel.
(c) A reduction of income tax rates will result in more people working.
Given the function , complete the following schedule and plot the curve.
| y | x |
| -4 | |
| -2 | |
| 0 | |
| 2 | |
| 4 |
Calculate the slope of the function you graphed in Problem A-6.
For each of the following approaches that an economist might follow in examining a decision-making process, identify whether the approach relies on the rationality assumption or on the assumption of bounded rationality:
(a) To make predictions about how many apps a person will download onto her tablet device, an economist presumes that the individual faces limitations that make it impossible for her to examine every possible choice among relevant apps.
(b) In evaluating the price that an individual will be willing to pay for a given quantity of a particular type of healthcare service, a researcher assumes that the person considers all relevant health care options in pursuit of his own long-term satisfaction with resulting health outcomes.
(c) To determine the amount of time that a person will decide to devote to watching online videos each week, an economist makes the assumption that the individual will feel overwhelmed by the sheer volume of videos available online and will respond by using a rule of thumb.
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