Question

Describe some of the trade-offs faced by each of the following:

a. a family deciding whether to buy a new car

b. a member of Congress deciding how much to spend on national parks

c. a company president decidingwhether to open a new factory

d. a professor deciding how much to prepare for class

e. a recent college graduate deciding whether to go to graduate school

Short answer

The trade-offs refer to the opportunity cost, an individual, or a group of people that suffers due to the situational decisions.

In situation a, the trade-off occurs between the spending of the family and purchasing of the car.

In situation b, a trade-off occurs between the budgetary allocation of the government on national parks and spending on other resources.

In situation c, the trade-off occurs between the cost of opening a new factory and the cost of allocating it for some other purpose.

In situation d, the trade-off occurs between the spending of time for preparation and using it for personal use.

In situation e, a trade-off occurs between the decision of whether to go for a job or to study.

Step-by-step solution

Trade-offs

In situation a, the family that is thinking of purchasing car has to decide between their expenditures. This is because before deciding it, they need to decide between the basic expenses they might face and whether they will be able to manage them.

In situation b, the trade-off occurs for the government in deciding whether to spend on national parks or need to allocate it for other developmental purposes. This is because if the government spends more on national parks, it might hamper other developmental activities of the nation.

In situation c, the trade-off occurs between the expenses incurred for a new factory and the amount that can be allocated for using other productive purposes or increasing the wage rates of the laborers.

In situation d, the trade-off occurs between the individual's decision on how much time should be spent for preparing for class and how much should be allocated for personal use and leisure. So, the individual has to decide it wisely.

In situation e, the trade-off occurs between the decision of an individual to study and gain knowledge or to start work and earn money. So, the trade-off occurs between the money that they could earn and the knowledge that they could gain.