Question

Problem Sets 1: Lectures 1-5 1) What is your Opportunity Costs and Applications What is your opportunity cost of attending college? What are the benefits you expect to gain lunm college education Estimate their total values. Is your schooling decision rational? If college education is the choice for me e for most young people to thrive in the future, why did Bill ne drop out of Harvard in his second vear? Why did not LeBron James even go to college er high school? Apply the concept of opportunity cost to explain. After college. you plan to start your own business in NYC. Instead of taking a loan from some hank suppose you can borrow $100.000 from your uncle without paying any interest. What is the opportunity cost to your uncle of lending $100.000 to you? 4 What is the opportunity cost of holding cash in your pocket or putting money in your bank's checking account? Where is your dream place or country to live outside the U.S.? Suppose you already finish college and work full time in NYC, what is the opportunity cost if you emigrate to your dream country? 2. In a market-based economy, most valuable resources are allocated through mutually beneficial exchange, either with monetary payment or in the form of barter. However, not all valuable goods and services can be allocated through market exchange. For example, your rights to college study. 1) What is the competitive criterion in the market place? What is its function in resource allocation? What are the rules of the game associated with market transactions? What is the function of the "rules of the game"? 2) Can you provide an example in which market exchange is unable to allocate resource effectively? What is the competitive criterion in this case? What are the relevant "rules of the game"? Suppose it becomes possible to apply market mechanism to allocate the resource in your example, how do you evaluate the efficiency level of applying market mechanism versus the criterion otherwise? siwei and Sonia both can produce firewood and candy. In one day, Biwei can produce six cords of mewood or three candy bars or any combination of the two: Sonia can produce three cords of firewood of six candy bars or any combination of the two. Graph Biwei's PPF and Sonia's PPF, respectively. Derive and graph their joint production possibilities frontier (PPF). one day. Harry can produce five cords of wood, live candy bars, or any linear combination of od and candy. Derive and graph the joint PPF for Biwei, Sonia, and Harry.

Answer 1

1) The opportunity cost of attending college is the cost of tuition, any associated costs, and any income, experience, and pleasure you miss out on because you choose to attend college.
College education prepares you, both intellectually and socially, for your career and your adult life. The benefits of a college education include career opportunities like better paying and higher skilled jobs, but studies have shown that it also leads to overall happiness and stability. Schooling decision is rational.