Answer to Question #265678 in Microeconomics for nick

Question

Describe some of the tradeoffs faced by the following: 

a. a family deciding whether to buy a new car

b. a member of Parliament deciding how much to spend on national parks c. a company president deciding whether to open a new factory

d. a professor deciding how much to prepare for class 

Answer 1

Trade Off is a situational decision where a person have to decide between two Aspects Or In simple terms, a trade-off is where one thing increases and another must decrease.

a) A Family decision to buy a car

Family deciding whether to buy a new car faces a trade-off between the cost of the car and other things they might want to buy . For example, buying the car might mean they must give up going on vacation for the next two years or weather to buy a Small Car which is inexpensive or a Luxurious CarOther aspects may include,fuel efficiency Carrying capacity of car .There involves an opportunity cost for the family in order to choose one other things other need to be sacrificed. In order to make an optimal choice a person needs to comprehensively look into the advantages and disadvantages of each setup. Eg-Vaccation would be just for some time but A Car as an Asset will be there Long term investment. Hence a proper evaluation of each aspect is required.

b) When deciding how much money to allocate towards national parks, members of Congress much calculate the trade-off with other important expenses such as national defense, infrastructure (bridges and roads), social programs, education etc. As money as a Resources is limited , it needs to be judicially allocated. By allocating money in national park we are contributing towards conservation of our environment or by using that money in defence to buy a missile for defence purposed, decision must be guided by the priorities & Committement of the Congress.

c) A Company president deciding whether to Open New Factory,Opening a new factory may limit investments in other projects, operation expenses, capital on hand etc.New factory would also means more profit ,employment and expansion the same money could have been allocated to upgrade the already existing assets in Factory or by Investing in the existing business.

d) A professor deciding how much to prepare for the class ,professor should consider when deciding how much to prepare for a class include time spent with family, personal activities and research.A recent college graduate that goes to graduate school would trade-off earning money now with a full time job and the money it costs to go to graduate school.A overburden of Homework could extract quality time which a person would have used in exploring self & others.