a. Think ofa recent purchasing decision in which you compared the marginal benefits associated with buying a product with
the marginal costs. How do you make a rational decision by comparing marginal benefits and marginal costs?
I recently purchased a new television. The one I had worked fine. But I had wanted to get a larger screen for a long time.
The prices had been dropping and during Black Friday weekend, I found one on amazon that was an acceptable price. The
money used for the television could have been used for investment and increased my net worth, however, this was a small
enough amount that the pleasure I gain from having the larger screen is worth more to me than a small increase in net worth
or other use for the money spent. The larger television provides an opportunity to invite more friends and family to my house to
watch events on the giant screen and time spent with them is beyond the value ofthe price paid.
a. What is the role of self-interest in free market operations (economic choice interactions)? Why engagement in self-interest
may lead to better welfare for the society?
Greed for lack of a better word is good” was a line from a movie in the 80’s called Wallstreet. While many no longer believe
greed” is good, they still seek to improve their positions in life. I have found through my years in sales that I make the most
money when I seek to help others first. My willingness to help them achieve their goals allows me to achieve mine. This does
not make me less greedy, in fact helping them is an act of selfishness and greed. I know I will get what I want when they get
want they need. Self-interest drives the marketplace. You go grocery shopping not because you enjoy it, but because you need
to. The supermarket does not open because it wants to give away groceries but because it wants to sell them for a higher price
than it paid to obtain them. This self-interest directly helps your self-interest of needing groceries. The manager at the grocery
may think they could run their own grocery better and will open a competing store. This provides choice and competition in the
marketplace. The helps you as a buyer of groceries but that help was due to the greed and self-interest ofthe former store
manager who had his own self-interest in mind by starting a business to earn more money than he was being paid.
