The Cost Of My Next Best Alternative

2485 Words10 Pages
Chapter 1 Opportunity cost, according to economists is the cost of my next best alternative. There are many other things I could have simply chosen to do with my time, instead of reading this chapter. Because I have chosen to spend my time reading this chapter, I will be giving up, some other activities that might be more gratifying. I could have spent my time doing something else like, watch Netflix or take a nap. Therefore, the opportunity cost of reading this chapter is the time spent, plus the pleasure I relinquish by not watching a movie or taking the nap. Chapter 2 The United States is a country in witch an enormous amount of individuals live in; therefore, its labor is much more expensive as well as capital. Since the…show more content…
If you have a big family, there is no way you can support them all. You practically slave away. Aggregate expenditures are also very low, and it’s decreasing, therefore companies don 't seek to hire workers, which is equal to a lower production, which is a lower GDP. So, what happens if we take the GDP of the U.S, and divide it by the number of people in the U.S? Easy answer, The GDP per capital is high. The GDP in Mexico is much more lower than in the U.S. Plus, the population of Mexico is lower too, so the GDP per capital is obviously going to be low. Chapter 3 What would happen in the apple market if the government set a minimum price of $5.00 per apple? What might motivate such policy? The price, being higher than the current market price, would decrease demand while increasing supply. If such a price is set in the market for apples, then the quantity of apples supplied will far exceed the quantity demanded and there will be a surplus of apples in the market. The government could implement such a policy to support farm incomes, which are otherwise in decline because demand is growing slower than supply created as a result of new technologies. The government would be motivated to set a price floor of $5.00 per apple if the market price below the equilibrium price. In this case, there would be too much quantity demanded and not enough supplied. Imposing a price floor this
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