Economists say that individuals make decisions at the margin

Economists say that individuals make decisions at the margin. What does this mean? How would an economist define the efficient amount of time spent playing tennis? van stops studying before the point at which his marginal benefits of studying equal his marginal costs. Is Ivan forfeiting any net benefits? Explain your answer. What does an economist mean if she says there are no $10 bills on the sidewalk? A change in X will lead to a change in Y; the predicted change is desirable, so we should Why do people enter into exchanges? When two individuals enter into an exchange, you can be sure that one person benefits change X. Do you agree or disagree? Explain. and that the other person loses. Do you agree or disagree with this statement? Explain your answer.

Solution

Economists say that individuals make decisions at the margin. This means, individual decisions are made based on marginal costs and marginal benefits. An individual makes a decision when MB=MC.

An economist would define the efficient amount of time spent playing tennis as that where the marginal benefit of playing tennis equals the marginal cost of playing tennis.

Yes Ivan is losing on net benefits because net benefits are maximized when marginal benefits equal marginal costs.

She means that people try to maximize net benefits.

People enter into exchange to make themselves better off by giving up one thing for something else.

No I don’t agree. Because the two individuals would not have voluntarily entered into the exchange if they did not both expect to benefit from it.