Principles of Macroeconomics 7th Edition

Published by South-Western College
ISBN 10: 1-28516-591-8
ISBN 13: 978-1-28516-591-2

Chapter 1 - Ten Principles of Economics - Questions For Review - Page 17: 1

Answer

A trade-off can be viewed as a compromise between two desirable things. In economics, trade-off usually includes opportunity cost: the best alternative foregone. Spending trade-offs are when money is sent on one good or service over another. Examples of trade-offs include: 1) Spending time to study economics over mathematics. 2) Whether to use your last 15 dollars to purchase a pizza or to buy a study guide for that tough economics course. 3) When a company decides to use a labor-intensive method of production with higher wage cost rather than a capital intensive method of production.

Work Step by Step

Note that the student can find the answer in Principle #1: People Face Trade-offs and write their own examples of "trade-offs" in their own words.
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