Aug 23 2009

Rational behavior, opportunity cost, marginal analysis – An intro to the Economic way of thinking

Freakonomics – Laid-Back Labor – New York Times

If you’ve spent much time on this blog, you know that I’m a fan of the boys at Freakonomics, the book that so aptly applies economic theory to the seemingly benign happenings of everyday life. In the article above the Freakonomists examine the difference between labor and leisure. I thought this article did a good job of introducing some of the basic concepts behind how economists think about the world.

As this year’s AP students begin to delve into the world of economics, one of the early topics they study will be the concept of humans as rational beings engaged in the constant pursuit of utility (the economist’s word for happiness). According to our text, “Economics assumes that human behavior reflects ‘rational self-interest.’ Individuals look for and pursue opportunities to increase their utility.”

If, as economists say, the purpose of life it the pursuit of utility, then presumably work is only a tedious but necessary means to an end, which we assume to be leisure. So why, as pointed out in the article above, do so many people willingly choose to spend so much time and money doing things like cooking, knitting, gardening, working in the yard, and other tasks that appear to be work, when they could easily pay others to do these menial chores for them, thus giving them more time for leisure? As the authors say, “Isn’t it puzzling that so many middle-aged Americans are spending so much of their time and money performing menial labors when they don’t have to?”

Where exists the line between work and leisure? This seems like an apt question to explore from an economic perspective. Here’s the author’s view:

“Economists have been trying for decades to measure how much leisure time people have and how they spend it, but there has been precious little consensus. This is in part because it’s hard to say what constitutes leisure and in part because measurements of leisure over the years have not been very consistent.http://www.rideau-info.com/canal/images/locks/mowing.jpg

Economists typically separate our daily activities into three categories: market work (which produces income), home production (unpaid chores) and pure leisure. How, then, are we to categorize knitting, gardening and cooking? While preparing meals at home can certainly be much cheaper than dining out and therefore viewed as home production, what about the ‘cooking for fun’ factor?”

Why a professional (let’s say a lawyer) who spends 50 hours a week in his office, earning somewhere in the range of $100 an hour for his labor, would choose to spend two hours mowing his lawn on a Saturday, rather than hiring the neighbor boy to do it for him, truly poses an economic paradox.

Let’s see why: If this man’s labor is worth $100 and hour, then we can calculate the opportunity cost of mowing his own lawn as $200 plus the value to this man of the leisure he could have enjoyed by not mowing his lawn. The man probably could have hired the neighbor boy to mow his lawn for $20, which would have then freed him up to pursue his own leisure activities (reading, working out, watching a movie, etc.) during those two hours, and compared to the $200 value of his own labor the $20 seems like a bargain. So is a lawyer who mows his own lawn acting irrationally?

It would seem the line separating leisure from work has blurred in modern times. A hundred years ago an activity such as sewing or caring for a lawn would certainly have been viewed as work, but today the behavior of millions of Americans would indicate otherwise. As a science rooted in the belief that humans are rational pursuers of their own happiness and leisure, the paradox of the lawn mowing lawyer poses several interesting questions for students of economics.

Discussion Questions:

According to chapter one of our text (McConnell and Brue’s Economics, 17th Edition), “Purposeful (rational) behavior does not assume that people and institutions are immune from faulty logic and therefore are perfect decision makers. They sometimes make mistakes.”

  1. Is the lawyer who mows his own lawn defying a fundamental rule of economics, that people act rationally? Is he making a mistake by not hiring the neighbor boy to do it for him?
  2. What is meant by opportunity cost? Give an example of a decision you have made recently that involved an opportunity cost.
  3. How is the lawyer’s decision whether or not to mow his lawn rooted in marginal analysis? Describe a choice you’ve made recently that involved marginal analysis.

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About the author:  Jason Welker teaches International Baccalaureate and Advanced Placement Economics at Zurich International School in Switzerland. In addition to publishing various online resources for economics students and teachers, Jason developed the online version of the Economics course for the IB and is has authored two Economics textbooks: Pearson Baccalaureate’s Economics for the IB Diploma and REA’s AP Macroeconomics Crash Course. Jason is a native of the Pacific Northwest of the United States, and is a passionate adventurer, who considers himself a skier / mountain biker who teaches Economics in his free time. He and his wife keep a ski chalet in the mountains of Northern Idaho, which now that they live in the Swiss Alps gets far too little use. Read more posts by this author

50 responses so far

50 Responses to “Rational behavior, opportunity cost, marginal analysis – An intro to the Economic way of thinking”

  1. Howard Jingon 14 Aug 2007 at 3:32 pm

    1. I don’t think that the lawyer is defying a fundamental rule of economics, as the lawyer might find mowing the lawn relaxing. Mowing the lawn gives the lawyer an opportunity to forget about his deadline and just concentrate on keeping the grass trimmed. And if the lawyer has a really huge lawn, and one of those lawnmowers that you can sit on, I am sure that the lawyer would take the opportunity to bring an Ipod or read in short intervals.

    2. No because he saves 20 dollars. If the neighbor boy is not an experienced lawnmower, he might damage the lawn in some way which might cost over $200 to repair.

    3. Utility is the enjoyment you get for doing something, such as watching a movie.

    4. Opportunity cost is the decision to do something else when you could be working to gain something tangible. An example of this is me setting the alarm clock at 8 so that waking up at 6:30 won’t be so difficult in 2 days. However, by sleeping through the alarm clock, and not waking up until 1:30 when my mom called me from work, I lost the opportunity to wake up early, and must instead rely on tomorrow to get adjusted.

    5. Marginal Analysis is looking at only the short term effects instead of the bigger picture. In my previous example, by waking up 5 and a half hours later than I intended to, I lost 5 and a half hours to do something productive, instead opting to do what I felt was the logical choice and hit the snooze button until I got tired of hitting the snooze button and turned the alarm clock off, and then went back to sleep.

    6. I think that the article represents a microeconomic scenario as it involves the indiviuals decision to do menial work.

    7. The lawyer’s decision to mow his lawn illustrates the individual’s economizing problem because while the lawyer would have been better off to hire someone else to mow his lawn, he wasted potential money/relaxation time to do it himself.

  2. Daniel Yeungon 15 Aug 2007 at 11:41 pm

    1. The lawyer mowing his own lawn provides him with better living conditions. Obviously that is exactly why he does that work, so he gains utility or in other words he gets what he wants. Through working in office, he gains money as utility, leisure time, he relaxes and gains the utility in that form, by mowing his lawn, he also gains utility.

    2. Well it depends, by working, he gains exercise and gains utility in that form. If people higher neighbor boys for all house work, then after a while, one will no longer be able to do anything basic activities necessary for survival. Therefore, if the lawyer feels he needs the exercise himself, not hiring the neighbor boy is certainly not a mistake.

    3. Utility is happiness, for example, you buy a ticket to a basketball game. Although u spent the money, u gained the opportunity to watch a basketball game which u will enjoy. Thus, u bought utility with the money.

    4. Opportunity cost is the next best option that u gave up for the decision u made. For example if u can go to watch basketball game, soccer game, or volleyball game. You want to watch basketball game the most, then you also wanted to go watch soccer game, and you are not that interested in volleyball. Then by choosing to watch basketball game, your opportunity cost is the opportunity to go watch the soccer game.

    5. Marginal analysis means that the decision is made at the margin, he did not take up any very detailed analysis about whether getting the boy or doing it himself will benefit him more. A marginal analysis I made recently would be choosing between two brands of chocolate and picking the more expensive one because the cover looks more tasty.

    6. The above represent a microeconomic concept as it deals with specifically the opportunity cost and utility of people’s daily life.

    7. what is the individuals economizing problem? -.- I think it just shows any individual got to make a lot of decisions in daily life weighing the different opportunity costs and utilities behind each decision and finally coming up to a marginal decision.

  3. Wan Jin Parkon 16 Aug 2007 at 9:48 pm

    1. Under the established discipline that mowing the lawn constitutes an act of work, the lawyer is indeed defying a fundamental rule of economics by acting irrationally; however, as Dubner and Levitt well pointed out, the distinction between labor and leisure has blurred: indeed, even though the lawyer does not need to mow the lawn himself, he chooses to do so. Under the authors' defiition of leisure–an act that you choose to do–mowing the lawn is leisure–be it a form of a stress-reliever or some sort of zen calming–meaning the lawyer is not irrational at all, as the lawyer gains utility of happiness through mowing his lawn.

    2. Under the established premise that the lawyer seeks out to mow his own lawn as a form of leisure, he is not making a mistake at all: if he hires a neighbor boy to do it, the lawyer deprives himself of the utility of happiness.

    3. Utility refer to the satisfaction derived from the consumption of a good or service. Beef Jerkies is one popular product that provides utility.

    4. When you make a decision, you choose the one that will yield the most utility; by gving up your second best option, you incur an opportunity cost, for you must give up that second option (and possibly the resulting income). When I decided to go play tennis with my friend yesterday, my opportunity cost was watching Oceans 13.

    5. The lawyer's decision is rooted at marginal analysis, as his decision has been made at the margin, meaning that he has made his decision by observing the resulting utilty in the short run and not in the long run. Instead of mowing the lawn, the lawyer could have worked, resulting in a greater income in the future; however, speaking in the short-run, working would not have provided as much utility as mowing would have. Likewise, instead of studying for SAT, I decided to party the day before school. While studying for SAT could have gotten me into a better college and hence greater utility in the long run, in the short run, studying did not provide as much utility as partying.

    6. It is a microeconomic scenario as only he (household) is affected by his decision

    7. ditto daniel, what is the individual's economizing problem?

  4. alicesuon 18 Aug 2007 at 12:19 am

    1. The lawyer mowing his own lawn is not acting irrationally, because although the opportunity cost of him mowing his own lawn as opposed to hiring someone else to do it seems to be ridiculous, he might find enjoyment in mowing his lawn and thus increase his utility, which is not irrational at all.

    2. Assuming that the lawyer views lawn-mowing as a form of leisure and not work, he is not making a mistake at all by not hiring the neighbor boy to do it for him; not only does he gain in utility, but he also benefits in physical fitness and saves the $20 it would have cost to hire the boy.

    3. The economic definition of utility is the pleasure, happiness, or satisfaction obtained from consuming a good or service. An example of something that provides me with utility is movies.

    4. Opportunity cost is the sacrifice one makes when one forgoes the opportunity of getting one thing in order to obtain more of another thing. Today when I decided to come home for dinner, my opportunity cost was going out with friends.

    5. The lawyer's decision is rooted in marginal analysis because he had to compare the marginal benefit of mowing the lawn- increasing utility and enjoyment- with its marginal cost- taking up his time which could have been spent engaged in other activities, such as work, which would result in earning more money. A choice I made recently that involved marginal analysis was when I decided to buy a salad at lunch. Although I would have preferred to eat something else, I chose to get a salad because the marginal benefit of not having to wait in a long line (not to mention having a healthier lunch) was greater than the marginal cost of eating something I didn't like as much.

    6. This represents a microeconomic scenario, because it is concerned with an individual person.

    7. The lawyer's decision illustrates the individuals' economizing problem because he has a limited income, and as such, must pick and choose which wants to satisfy with his income in order to create maximum utility. In choosing to mow his lawn by himself, the lawyer is helping to save money that will go towards satisfying other wants while simultaneously increasing utility because he views lawn-mowing as a leisure activity.

  5. anqxlon 18 Aug 2007 at 6:11 pm

    1) The lawyer who mows his own lawn is not defying the fundamental rule of economics. It is merely making a mistake, according to economics. However, stepping out of economics’ boundaries, the lawyer is acting rational because that’s what people do today for leisure and exercise. I don’t think one should live the life according to the rules.

    2) According to economics’ fundamental rule the lawyer is making a mistake because it cost more to mow the lawn himself than hiring a neighbor boy. However, if the lawyer experiences pleasure and relaxation from mowing his lawn, the marginal benefit would exceed the marginal cost, and this would follow the fundamental rule of economics that people act rationally.

    3) Utility: pleasure or happiness or satisfaction obtained from consuming a good or service. Having dinner out with my family gives me utility.

    4) An opportunity cost is the sacrifice you made for a decision you made. When I decided to go out with my friends last night, I forgot to prepare for my French lesson and as the consequence, I have to double up on my French study this week.

    5) The lawyer’s decision to mow his lawn can be analyzed by comparing the marginal cost and benefit. From mowing his own lawn, he feels that the pleasure he gets from his labor exceeds the $100 per hour cost. Although it is cheaper, only $20 per hour, to hire the neighbor boy, the lawyer gets no pleasure.

    I think I use marginal analysis when I shop. Since my love for shorts exceed everything, even the cost, I end up buying most of the stuff :P.

    6) This scenario represent a microeconomic because it looks into a particular person’s decision instead of looking at the general population.

    7) The lawyer’s decision is within his budget line; he is paying himself $200 to mow the lawn.

  6. Markon 19 Aug 2007 at 5:16 pm

    1. I would say that the lawyer who moves his own law is defying a fundamental rule of economics, that people act rationally. From an economic perspective, it would be much wiser for him to work for 2 hours and pay $20 to the lawn mower from his gained $200. That way he is maximizing his usage of time and money earned.

    I would argue that he is acting irrational because if you conduct a marginal analysis on the two outcomes he gains a lot more with the option that he works and pays the lawn mower, rather than does the law mowing himself. If he does the lawn mowing himself, he looses the chance to make $180 and is forced to do a tough job. If he pays someone, he will gain $180 dollars and still have 2 hours of leisure away from lawn mowing.

    $180 + 2 hours time away from lawn moving > 2 hours of lawn mowing and -$180

    2. Yes he is because he will gain a lot more if he works and hires the boy to do it for him, rather than doing it himself. If he works and pays the lawn mower, he will gain $180 dollars + 2 hours of time away from lawn mowing. If he does it himself, he looses the opportunity to gain $180 dollars and has to sacrifice 2 hours of his time. The gain in the first choice is greater than the second, so the first choice would be more rational.

    3. Utility is the satisfaction you get from a service or a product. A bed provides me utility because I can sleep well and comfortably on it.

    4. Opportunity cost is when you sacrifice the gain from one option for the gain from another option. Last night I only had time to watch either a comedy or a horror movie. I chose to watch a comedy and my opportunity cost was being able to watch the horror movie.

    5. The lawyer’s decision is rooted in marginal analysis because he has to pick a choice between 2 options which both yield different net values. If he chooses to stay home and mow the lawn his costs are time and money; his benefits are getting the job done, and maybe some fun. However if he chooses to hire someone instead his benefits are: getting the job done, $180 dollars, and 2 hours of leisure time away from lawn mowing; his costs are: to work for 2 hours. The 2nd option obviously yields greater gain for the lawyer so speaking rationally, the lawyer should stick with option 2.

    When I woke up today I had a choice of going out to hang out with my friends or to stay home and do my homework. If I were to hang out with my friends my benefits would be: some fun; however, my costs would be: time, possibly my grades, developing a bad habit. If I chose to stay home and do my homework my benefits would be: good grades, on track with school, learning something; my costs would be: time, maybe some fun. What really matters for my future would have to be whether or not I do good in school, thus the 2nd option yields more benefits than the first. And because of that, I decided to go with the 2nd option.

    6. The article above represents a microeconomic scenario because it involves the economy of households. Microeconomics is the branch of economics that that studies the economy of consumers, households, or individual firms.

    7. The lawyer’s decision illustrates the individual’s economizing problem because he was presented a decision where he had to conduct marginal analysis and compare the net gains of both options. He should choose to work instead because this way he is maximizing his benefits by maximizing his income and the amount of work that gets done. By choosing this option he does have to sacrifice his own oppertunity to mow the lawn.

  7. Helenon 25 Aug 2007 at 5:54 pm

    1) The lawyer is not defying a fundamental rule of economics because while some people may see him as irrational for doing a chore when he could be doing something "fun", mowing a lawn is probably "fun" for him and he is doing it for his self-interest. After days and nights in front of papers and computers, looking into some green grass and doing some physical work outdoors seem pretty rational to me.

    2) I don't believe he is making a mistake by not letting a boy do it. Financially, maybe it is not the best choice, since the opportunity cost of him mowing the lawn is way higher than the boy doing it, but sometimes we have to take a step back from all the money details. First of all, is he really going to work on a Saturday? Probably not. So can we really account his opportunity cost as $200? Probably not. The most his opportunity cost can get is probably losing some reading or watching TV time. But if he chooses to mow a lawn, then his yard most likely means more to him than a book or a movie.

    3) Economically, utility means "the pleasure, happiness, or satisfaction obtained from consuming a good or service". Lots of things provide me with utility. Some examples would be a good movie, really good food, or even just simply nice clothes.

    4)Opportunity cost is the opportunity lost. The opportunity cost of something is what could have been produced with the resources that was put into making that product. The opportunity cost of me replying to this blog is the time I could be spending outside or doing something else and the money that goes into every minute that I am online.

    5)Before the lawyer mowed his lawn, he probably ran a marginal analysis without knowing it. If he mowed his lawn by himself, the marginal benefit would be getting some fresh air and having what he could think as "fun", and the marginal cost would be the time he could be using to read or watch a movie. If he hired the boy, the marginal benefit would be using that time to do whatever he wants, and the marginal benefit would be the $20. Obviously the lawyer does not think of mowing the lawn as a chore, since he chose to mow the lawn by himself at the end.

    I had to go through the same thing whenever I eat a snack. The marginal benefit of me choosing something like an apple would be lower calories and healthier, but the marginal cost would be it doesn't taste as good as something say like a brownie. The marginal benefit of me eating a brownie is how good it tastes, but the marginal cost is me feeling fat and unhealthy a few minutes after I eat it. So I decide that health and feeling good about myself exceeds the few seconds of guilty pleasure I get from the brownie, so I choose the fruit.

    6) The example of the man mowing his lawn is a microeconomics problem, because it is talking about a small individual's economic scenario, not whole aggregates of the economy.

    7) Lawyers might make a lot, but their income is still limited no matter how much they make. But their wants, like everybody else, is unlimited, so that's where their economizing problem comes in. Yesterday the lawyer needed to pay his rent, and today he needs to get his lawn mowed. And tomorrow he might want to buy a Ferrari. He can't have everything that he wants because even he needs to have a budget. So he decides to relieve his economizing problem a little by mowing the lawn himself.

  8. brithnyon 29 Aug 2007 at 10:45 am

    I recently read Freakonomics over the summer, and find it quite interesting, especially the bizarre topics it brings up. Under the present fundamental rule of economics, the lawyer can be described as acting irrationally. This is obviously because he can just pay the lawn boy, whose opportunity cost is much less than him mowing his lawn himself. However, in real life, economics does not play so intricate a part as we think. What about the lawyer who mows his lawn just for fun? Or as a stress-reliever, or even as a hobby? Maybe he just gets a kick out of mowing, and it should not be our place, or any economist's place, to stop him, even if it means a loss a money in the long run. So therefore, he might not be making a mistake by not hiring the lawn-boy next door, because in doing so he might be gaining his utility, or self-satisfaction, from mowing his lawn by himself, such as one would get from eating popsicles, or the like. It does involve a case of marginal analysis though, since he is obviously looking towards the short-term effects, such as gaining pleasure now from mowing, rather than looking at the long-term money he might've made by working instead. For example, just yesterday I made the decision of going out to eat, instead of saving money and eating at home, just because I wanted to have the immediate satisfaction of dining out, rather than saving my money. This deals with a microeconomic issue, since it is personal to him, and represents the individual's economizing problem since everyone has their own needs and wants, and has to make the decisions that are best for themselves.

  9. Robbieon 11 Sep 2008 at 7:16 pm

    I understand what you are saying, but some people simply enjoy mowing their lawns and you could classify that as a hobby or stress reliever.

  10. John Bianchion 12 Sep 2008 at 12:15 am

    As a lawyer, I have two things to say about this phenomenon:

    (1) I really enjoy working in my yard. Although if I didn't, I would be paying the neighbor kid in a heartbeat.

    (2) As a person with base economic sense, I consciously consider the fact that I COULD be earning much more regularly during my leisure time. However, this sense becomes hostile to my "utility" as soon as the work day ends. Thus, anything that helps me escape that mindset is a blessing.

    Go Seattle U.!

  11. Jason Welkeron 12 Sep 2008 at 2:26 am

    Nice Mr. Bianchi. I'd be interested to know, AS A LAWYER, how much do you people actually make? Would you be able to tell me that?

    Haha, by the way, John Bianchi is one of Mr. Welker's best friends, so he can pick on him as much as he wants. Mr. Welker sure appreciates his extremely smart and hard working friends who read and comment on his blog! Thanks John!

  12. BjornKvaaleon 15 Sep 2008 at 9:04 pm

    Unless the lawyer really enjoys mowing his lawn, he is defying a primary rule of economics, which is opportunity cost. For the time he requires to mow his lawn, he could have made a lot more money by doing his own job. The lawyer is acting irrationally on his part because he could have paid the neighbor boy to do the work instead. Unless the lawyer likes to mow his own lawn, he could be enjoying his weekend. If the lawyer would have done his own job, he could also maximize his utility to a greater extent because he has more money to do so.

    During the summer vacation, I worked at school for some money. This is a prime example of opportunity cost because in the week I took to work at school to make money, the opportunity cost could have been to spend a week relaxing and watching TV. I chose to work and make money, but I had to give up relaxing and watching TV.

    Marginal analysis is the analysis of marginal benefit and marginal cost. The marginal cost of the lawyer mowing the lawn was giving up his free time and making money being a lawyer. The marginal benefit of mowing the lawn was his satisfaction, if any, he received by doing it. In a best case scenario, the marginal benefit should equal the marginal cost.

  13. Armaan Malhotraon 16 Sep 2008 at 6:31 am

    The lawyer, by mowing his own lawn, is defying the fundamental rule of economics. The rule is that people act rationally, which he is defying by doing something generally considered "home production" (or for some, even "market work") but in time that's meant to be dedicated to leisure, an act that isn't rational. It is even less rational if he claims to find this a form of leisure, but as to whether it's a mistake or not, that only he can decide, since it depends on what he values.

    The opportunity cost is basically what else could he have been doing in that time, essentially the opportunity he lost. In this case it could have been him working, thereby earning 200$ in the two hours spent mowing. Similarly, I recently decided to buy a sandwich instead of hot lunch, the opportunity cost was not getting a hot meal, salad and drink, but on the other end I benefited from not having to wait in the enormous line, saving me time.

    The marginal cost to the lawyer was his free time (or 200$ worth of work) and perhaps a small amount of his sanity (unless he truly enjoyed it, which I'm skeptical of), his marginal benefit was both his enjoyment of mowing the lawn and saving the 20$. So if he values the enjoyment of mowing at 200$ or free time, he made the right choice. This applies to my sandwich/hot lunch analogy as well, since the marginal cost for me was the hot lunch, salad and drink, but the marginal benefit for me was the time it gave me in which to do other things.

  14. Daniel D'Amicoon 16 Sep 2008 at 4:01 pm

    1. If the Lawyer mows his own lawn he has an opportunity cost with doing his job and earning money. If he hires the neighbor boy he will have to pay him, but he will be able to do his own job and make more money.

    2. Opportunity cost is something you give up to do something else. This week instead of going home and studying for a test I went to basketball practice. The opportunity cost of going to basketball is not being fully prepared for my test. If I would of gone home to study for my test the opportunity cost of going home would be going to basketball practice, because it was something else I could of done. Another opportunity that I didn't take.

  15. Yael Burlaon 17 Sep 2008 at 5:28 am

    While the lawyer certainely could put his time to "better" use by watching tv, etc, and pay much less to mow his lawn if he were to choose the gardener to do the work, perhaps it is the lawyer's utility to do this work, or simply the lawyer does not see this job as a tedious and time consuming one. It is neither wrong or right; because it is the lawyer's time that is being consumed, it is up to him to decide whether the opportunity cost of paying someone to do the work or simply doing it himself it really worth it. Opportunity cost is defined as the value of the sacrifice made to pursue another action instead. Recently, I chose to study for a Biology test instead of finishing pieces of other homework since, in my mind, it would pay off later if I was prepared for the test when I knew I could postpone my other work for the preceeding night. For me, the marginal benefit seemed better than its cost since I seemed to have gained more than I would have if I hadn't studied. In this case, my marginal benefit was the same as my marginal cost since it satisfied me and I performed well on the test.

  16. mikewilkeson 17 Sep 2008 at 5:02 pm

    1. Is the lawyer who mows his own lawn defying a fundamental rule of economics, that people act rationally? Is he making a mistake by not hiring the neighbor boy to do it for him?

    2. What is meant by opportunity cost? Give an example of a decision you have made recently that involved an opportunity cost.

    3. How is the lawyer’s decision whether or not to mow his lawn rooted in marginal analysis? Describe a choice you’ve made recently that involved marginal analysis.

    Not necessarily, he could find mowing his lawn to be relaxing and a way to take his mind away from the world of work which he for ever seems to get caught up in. It could be his way to escape. This would then mean that it is not a labour but in fact leisure, so he could be maximizing his utility.

    Opportunity Cost is the cost of what he missed out on doing whilst he was mowing the lawn. For example if he payed the neighbor to do it, he could have read a book, or watched tv.

    It is rooted in marginal anayalsis because he could pay the neigbour 20$ to mow his lawn, but then the meighbour may not be as experienced as a proffessinal who charges 100$ to mow the lawn, the kid could destroy the lawn somehow and it could cost over 200$ to repair.

  17. Duy Anhon 24 Aug 2009 at 4:26 pm

    1. I don't think that the lawyer is defying the rule of economics, as he might find the lawn-mowing ralaxing. If he cuts the grass and finds it interesting, and he has chosen to do it for his leisure time, then he would have saved 20$. Because if he pays the boy next door to do it, he would have lost his fun in cutting the grass, and also have to pay money.

    2. Opportunity cost, I think, is the value of the best alternative after making a decision.

  18. Christopher Francoison 24 Aug 2009 at 7:13 pm

    Questions:

    1) From an economists point of view he is makeing the mistake of not using someone else's cheap labour and is spending 200$ instead of 20$ by using the younger. Since time is also a scarce resource then the economist should have hired cheaper labour and used the time to relax knowing that he probably has things to do later on. But if he has nothing to do then cutting the grass could be considered as leisure time for him.

    2) Opportunity Cost would mean that instead of spending 2 hours mowing his own lawn and wasting 200$ since he is worth that much every hour but he could also hire someone else to mow his law and spend 20$ and save 2 hours to spend on what he wants to do.

    3) It is rooted in marginal analysis because a small decision has lead him to decide whether to gain 2hours of his time for what he wants by paying another person to do it for him or to spend it relaxingly cutting the grass, therefore it all has to do with the choice and the facts on what he would find easier. An example of something that I have done that is marginal analysis would be whether or not to go out with my parents Saturday night. Go with parents and waist one hour of my time but gain "good points" with them or not go with them, have fun, and then get shouted at later.

  19. Hannaon 25 Aug 2009 at 1:50 am

    I think that this situation can be looked at from two angles. On the one hand, the lawyer could be defying the fundamental rule of economics, that people act rationally, because he is unaware of that if he would pay someone else to mow his lawn, he would not have to give up the opportunity cost of leisure or earning money by working for the two hours it would take him to mow the lawn. On the other hand, what if the lawyer finds it joyful to mow his lawn and considers it a pleasure? If that is the case, then he is acting rationally because in this situation time consumption cannot be considered an opportunity cost, since he enjoys mowing his lawn, plus he is saving 20 dollars by not having to pay someone else to do the job for him. It is true that he could have spent those two hours working and earning 200 dollars, but if he had the opportunity to choose between mowing his lawn, working or enjoying his leisure time, I am pretty sure he would choose the latter option.

    Opportunity cost is something that you give up in order to have something else. For example, a lot of times I find myself giving up good yet unhealthy food, such as Frappocinos at Starbucks or chocolate bars, because I want to be healthy and maintain my weight. In this case, the good food is my opportunity cost because I have to give it up in order to fulfill my wanting of being healthy.

    Marginal analysis is a decision that is made at the margin, meaning that you are only observing the resulting utility in the short run and not in the long run. Recently I found myself really wanting to play my new Playstation game “Guitar Hero”, but at the same time, I had a lot of homework that needed to be done that day. So I was choosing between work and leisure, and in this situation I decided to not do my homework in order to be able to play “Guitar Hero”, even though I knew that doing my work would benefit me in the long run and playing a Playstation game would only be satisfying as long as it lasts.

  20. Lara Bullenson 25 Aug 2009 at 3:45 am

    1) Is the lawyer who mows his own lawn defying a fundamental rule of economics, that people act rationally? Is he making a mistake by not hiring the neighbor boy to do it for him?

    I believe that the situation could go either ways. It could be defying the rule, and it could not. First of all, the lawyer is basically worth 200$ for the time he spent mowing the lawn. Therefore instead of doing manual labour, he could have easily spent 15$ paying his neighbour. On the other hand, he is clearly not being payed for this labour although he is worth 200$, so the labour should be considered as his own leisure time. This is because humans are the ones who are capable of making their own decisions.

    2) What is meant by opportunity cost? Give an example of a decision you have made recently that involved an opportunity cost.

    Opportunity cost is simply when you give something up in order to have another thing. For example, I recently bought two pairs of flip flops for 10$ instead of buying a dress for much more. The opportunity cost of the flip flops is therefore the dress, since I had the opportunity to buy the dress but instead I bought the 10$ pair of flip flops.

    3) How is the lawyer’s decision whether or not to mow his lawn rooted in marginal analysis? Describe a choice you’ve made recently that involved marginal analysis.

    I didn't really understand the concept of marginal analysis but once explained I will answer this question 🙂

  21. Sarahon 25 Aug 2009 at 6:21 am

    1.Is the lawyer who mows his own lawn defying a fundamental rule of economics that people act rationally? Is he making a mistake by not hiring the neighbor boy to do it for him?

    The lawyer is acting rationally since he saved $20 he would have paid the boy by mowing the loan himself. The saving of the money is an advantage because he can now spent it on something else he wants to. The only thing he lost is the opportunity to do other things, such as reading, working out etc. during the two hours he mowed his loan.

    2.What is meant by opportunity cost? Give an example of a decision you have made recently that involved an opportunity cost.

    The opportunity cost of anything is what is given up in order to have it. The opportunity cost is the opportunity lost.

    Example: I played volleyball for 2 hours this afternoon instead of doing my homework during those 2 hours. The opportunity cost is the lost opportunity of doing my homework during the time I played volleyball.

    3.How is the lawyer’s decision whether or not to mow his lawn rooted in marginal analysis? Describe a choice you’ve made recently that involved marginal analysis.

    Marginal analysis: weighing the marginal (additional) benefit and marginal (additional) cost in order to make the best decision.

    Example: I had to choose between playing volleyball and doing homework between 4 and 7 pm. I chose to play volleyball. First of all, it is just more fun than doing homework, I am together with my friends, I did exercise and the practice will serve me in further matches to play my best. But, doing homework is also very important: First of all, I get a good grade for doing my homework, my knowledge will serve me later in a test which will make up 50% of my final grade which will later be part of my final grade that is in my report for university. If this grade is good, I have a much higher chance of getting into a good university which means a much higher chance of getting a well-paid job which makes life easier.

  22. Ika Lobjanidzeon 25 Aug 2009 at 4:49 pm

    1. Is the lawyer who mows his own lawn defying a fundamental rule of economics, that people act rationally? Is he making a mistake by not hiring the neighbor boy to do it for him?

    I do not think that the lawyer is doing anything wrong by mowing his own lawn. When somewhat "successful" middle-aged men do chores such as cooking and mowing the loan, it is not because they don't want to spend that $20 on the neighbor but because they enjoy doing it. Maybe there is nothing funner to do around the house or maybe they just enjoy doing things their own way and appreciating it and feeling good after it. As long as he does the chores because he considers them fun or at least gets some enjoyment out of it, there is absolutely no reason why a neighbor boy should do the chores for him.

    Let’s say the lawyer did realize the terrible mistake he had made so he paid the neighbor boy $20 in order to have 2 hours of “free time”. What would he do with this “free time”, go and start cooking for his family? And after realizing another terrible mistake he made by wasting his time cooking, say he called his wife and asked her to cook in order for him to have 2 hours of “free time”, what would he do go and start gardening? This could go forever but the point is that a middle aged lawyer enjoys doing all these chores just like a teenager for examples enjoys playing on the computer, chatting on the internet and going on concerts. If you wouldn’t ask a teenager to pay someone else to do things that he or she enjoys, why would you expect a middle aged lawyer to pay someone else for doing things that HE enjoys?

    2. What is meant by opportunity cost? Give an example of a decision you have made recently that involved an opportunity cost.

    I don’t think that the lawyer thought at all about opportunity costs in the matter of money. He could have thought about opportunity cost as time because the two hours he spent on just mowing the lawn, he could have spent on doing something else like reading, working out and watching TV as said in the article. The same point still has to be raised to question whether or not mowing the lawn IS what he chooses to do in his free time because he gets pleasure from it.

    3. How is the lawyer’s decision whether or not to mow his lawn rooted in marginal analysis? Describe a choice you’ve made recently that involved marginal analysis.

    I think the lawyer may have thought about the marginal benefits and costs of mowing the lawn himself. On one hand he obviously mows the lawn so it looks nicer, he finds a way to spend his free time and he at the same time enjoys the work and he gets to save the $20 he didn’t pay to the neighbor boy. On the other hand he spends 2 hours of his precious free time on just mowing the lawn, he cannot work at the same time and make $200 he usually makes per hour and he cannot enjoy other activities like watching TV.

    When my friend visited Switzerland for a week, I had to make a decision of going out with him during the weekdays instead of staying home and completing homework, especially in the first week of school. By going out, I got to catch up with him, have a lot of fun and enjoy the free time however at the same time I didn’t do the homework required, it resulted in my teachers being unhappy and I had to spend my weekend on making it up.

  23. Jason Fedoron 25 Aug 2009 at 7:23 pm

    1. I do not think the lawyer was acting irrationally because he might want to spend his time mowing the lawn because it is a change from his normal work, for example. He might also consider it relaxing, or a time to think about work while being outside. There are many reasons that he might rationally decide to work outside instead of paying someone else.

    2. Opportunity cost is what is given up that could be used for something else. For example, working on one project has the cost of not working on another one. The lawyer's cost of mowing the lawn, was the opportunity of earning $200 doing his job. Recently, I have given up time that I could have been doing Math homework, doing this Econ homework.

    3. Marginal Analysis is weighing the marginal cost and marginal benefit of a decision. The lawyer weighed the cost (his free time) and the benefit (a well mowed lawn) and decided that his free time was worth the benefit, and mowed the lawn. A few days ago, I had to use marginal analysis to decide whether or not to make pancakes. The cost was my time to make the waffles, and the benefit was a nice tasty breakfast. I decided that it was indeed worth my time that I could have used to play, or do homework, to make pancakes.

  24. Lara Bullenson 25 Aug 2009 at 8:47 pm

    Here is my answer for 3 that was missing in my last post.

    3) How is the lawyer’s decision whether or not to mow his lawn rooted in marginal analysis? Describe a choice you’ve made recently that involved marginal analysis.

    The lawyer's decision whether or not to mow his lawn is rooted in marginal analysis because he could have lost 20$ by paying the neighbour boy to do his lawn, and therefore gained more leisure time – but he decides to do it himself. A decision I made recently that involved marginal analysis was when I decided to babysit without being payed.

  25. Sebastian Frischon 25 Aug 2009 at 9:03 pm

    1. Is the lawyer who mows his own lawn defying a fundamental rule of economicsthat people act rationally? Is he making a mistake by not hiring the neighbor boy to do it for him?

    I believe that the layer is not defying a fundamental rule of economics, because mowing his lawn may to him appear relaxing and be a diversion from his work. as the layer enjoys mowing the lawn himself, he does not act wrong by not hiring the neighbor boy is not a mistake.

    2. What is meant by opportunity cost? Give an example of a decision you have made recently that involved an opportunity cost.

    Dictionary.com defines opportunity cost as “The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.” When I recently went mountain biking for five hours, the opportunity cost would have been to spent some time relaxing, or meeting with friend.

    3. How is the lawyer’s decision whether or not to mow his lawn rooted in marginal analysis? Describe a choice you’ve made recently that involved marginal analysis.

    By deciding to mow his lawn himself, he saves 20 dollars, which he would have paid the neighbors boy. If the layer had decided to let the neighbor boy do the job, the layer instead could have 100 per hour, by doing job-related work. Two days ago, I decided to bike to school instead of taking the bus. If I would have chosen to take the bus, I would have arrived at school earlier, and would not have spent so much energy.

  26. Nick Nowotnyon 25 Aug 2009 at 9:38 pm

    1. Is the lawyer who mows his own lawn defying a fundamental rule of economics, that people act rationally? Is he making a mistake by not hiring the neighbor boy to do it for him?

    I don’t think that the lawyer defies a fundamental rule of economics, because by mowing his lawn himself, he increases his utility. I think that the lawyer should simply shows that he can do something himself, without paying 20 Dollars for someone else to do the work for him. Of course the 200 dollars and other leisure such as watching a movie are the opportunity costs, but again, he considers this as utility.

    Also, the lawyer probably has no market work on a Saturday; so perhaps, he spends this time on home production. In this case the opportunity cost is narrowed down to pure “leisure time”, such as watching a movie for example, since the 200 Dollars an hour don’t apply on Saturday.

    Overall, I think that the major concern is that utility makes the lawyer from acting rationally.

    2. What is meant by opportunity cost? Give an example of a decision you have made recently that involved an opportunity cost.

    Opportunity cost is the evaluation of the cost and benefits of a choice. For example, when I decide to study in America, which costs 40 000 dollars tuition, I can benefit from a good reputation. However, I can also go to a public university with the same courses in Europe. The opportunity cost is 40 000 Dollars, because in Europe I would get the same education with a similar reputation for free.

    3. How is the lawyer’s decision whether or not to mow his lawn rooted in marginal analysis? Describe a choice you’ve made recently that involved marginal analysis.

    The lawyer’s decision is rooted in marginal analysis, because the lawyer chooses not to hand this work over to the neighbor. This means that he doesn’t spend 20 dollar, which he then can spend on something more useful. He benefits from a certain utility on the one hand but on the other hand, he could have used this time to do something else, which would have profited him more.

    The best example of marginal analysis would be if I decide to do my Internal Assessment very well and thoroughly. Then the chances of getting a higher IB score is increasing, which then simultaneously increases to get accepted on a better university.

  27. vincenton 25 Aug 2009 at 9:39 pm

    1.

    The lawyer is defying a fundamental rule of economics, because he refuses to hire a boy for $20, while he could work for half the time and have his lawn mown, earning $100 minus the $20 to pay the neighbor boy, meaning he had made a profit of $80 and he would still have one hour more free time for his leisure activities. Unless the lawyer considers mowing the lawn a balance to his usual work, his satisfaction could be worth more than the $80 or $180 he could earn, because he’d anyway have enough money if he had earned $100 per hour.

    2.

    The opportunity cost is the choice you give up in order to make your decision, or “the next best alternative foregone when an economic decision is made”, for example, when I choose to spend my free time relaxing instead of doing homework, my opportunity cost is the work I haven’t done.

    3.

    Marginal analysis is the process of identifying the benefits and costs of different alternatives. The marginal cost of the lawyer ordering the neighbor boy to mown his lawn is the $20, while the marginal benefit is his free time. An example is when I could decide between go playing soccer for a few hours or spent this time working. I chose to work in this time because I could earn money that I then could later spend usefully. The marginal benefit is the money I have earned for each additional hour of work and the marginal cost each additional hour I have spent playing soccer.

  28. Melanie Beilkeon 25 Aug 2009 at 9:42 pm

    1. Is the lawyer who mows his own lawn defying a fundamental rule of economicsthat people act rationally? Is he making a mistake by not hiring the neighbor boy to do it for him?

    I do not think that the lawyer is obliged to pay his neighbour. If he would pay his neighbour to mow the lawn for him, he would be losing the $20. If he rather consideres completing the work himself, it is his descission and his right to.

    2. What is meant by opportunity cost? Give an example of a decision you have made recently that involved an opportunity cost.

    Opportunity cost means that you lose one option by gaining another. It is similar to "trading." A decision that I have made recently that involved an oppotunity cost was when I decided to go to town yesterday, instead of immediately travelling home and starting my homework.

    3. How is the lawyer’s decision whether or not to mow his lawn rooted in marginal analysis? Describe a choice you’ve made recently that involved marginal analysis.

    The lawyer's decision is an example of marginal analysis, because if he would have mowed the law himself, he would have decided to not spend the $20. By doing so he would have made more money, just by doing the work himself. I often decide to take the train to school and then the shuttle bus from thalwil up to the high-school. By doing so, my mother's car does not give off that much emission.

  29. Amit Zaidenbergon 25 Aug 2009 at 10:37 pm

    1) the Lawyer is not acting irrationally because he would rather spend the time and save the money mowing his own lawn. This does not defy a fundamental rule of economics because he is still using resources just instead of money time in order for his lawn to be mowed. There is no such thing as a making a mistake in such a situation because it is simply his preference.

    2) Opportunity cost the the price one pays when he makes a decision rather than the other. For example when i watched a movie i paid the cost of not using that time to better myself in some way in addition to the 15 francs that i paid for the ticket itself.

    3)Marginal analysis is what everyone does when they make a choice to send money or time, they weigh the marginal cost or benefit of their choice and decide whether is is worth it. The Lawyer went through marginal analysis whether he was conscious of it or not he weighed the cost of paying the boy money with the benefit of more free time or mow the lawn himself and having more change in his pocket. Ultimately he decided that he would rather have the extra cash then the extra time. Recently i was choosing classes for the year and had to decide between a tougher class and one less challenging. The tougher class meant i would have to spend more hours working however it meant i had a better chance of using my knowledge gained in the future for college or work and ended up with the harder class.

  30. Charlotte Spliidon 25 Aug 2009 at 10:39 pm

    1. I think this is mostly phsycological. The lawyer wants to feel useful and good about him self. And even if he did hire the nabour and earned some money him self, it doesn't mean he would do it. Maybe he would just go out and spend some money or relax.

    2. Opportunity cost is what you give up to get or do something else. For example if you buy a dog, the opportunity cost could be a cat or just some more time for one self.

    3. Because there are both costs and benefits. The cost would be the money he should pay if the nabour mowed his grass. The benifit would be that he now has more time for him self.

    Example; yesterday after school I desided to watch some tv instead of doing my homework. Today my teacher made sure I payed the cost because of my unfinished homework.

  31. Lara Fuhrmannon 26 Aug 2009 at 1:17 am

    1.) I think the lawyer was just lazy which is normal everybody is lazy once in a while. I think people can act rationally but don't do it all the time. The lawyer had to weigh the benefit and th cost. His benefit more free time while somebody else is doing his work. The cost he has to pay the boy who mow his grass. I don't think he did a mistake, because he earns more than he lost by not mowing the grass.

    2.) I lost my agenda and wanted to buy a new one. I decided to go and buy a new one. The opportunity cost I made was I could have bought something else or I could have had som more free time.

    3.) It is a marginal analysis, because he has to weigh marginal benefitwith marginal cost. The benefit more time for himself, the cost he has to pay the boy.

  32. Sakktion 26 Aug 2009 at 2:29 am

    1) Spending a couple of hours mowing the lawn on a Saturday seems very rational to me. Hence, the lawyer is definitely not defying a fundamental rule of economics. The lawyer should definitely not regret his decision to the mow the lawn himself. Even though there was an explicit cost of 20 dollars and he could have been earning some money during the same time, the lawyer gained a great amount of benefits. For instance, if the neighbor boy was hired to mow the lawn, the lawyer might not have been satisfied with his work, or he believes that the boy could have done a better job. As a result, if the lawyer would have mowed the lawn himself, he would have worked until he was self-satisfied and content with the job. Furthermore, he would have at least received some rare physical work out that he might not normally get, since he has such long working hours. The explicit benefit would be of course that the lawyer would save the 20 dollars. Moreover, it also depends on the lawyer and whether he enjoys mowing the lawn. He might consider this activity a hobby or enjoyable. If he doesn’t that this would be a different situation.

    2) The most understandable definition of opportunity cost is the cost of an alternative that must be given up in order to pursue a certain action. In other words, they are the benefits that one could have received by taking an alternative action. I make decisions that involve opportunity costs every day. For example, on Sundays, I wake up at 8 a.m. to play badminton. The opportunity cost in this situation was that I could have slept for another few hours and gained more rest.

    3) Marginal analysis involves the lawyer to think about the supplementary costs and benefits in order to make the best decision for himself. Consequently, the lawyer’s decision is rooted in marginal analysis, since he eventually decides not to hire the boy and to mow his lawn himself instead. The marginal cost in this situation would obviously be the 20 dollars that the lawyer would have to pay the neighbor boy for his work. The marginal benefit is that he could save 20 dollars and at the same time gain some physical exercise and self-satisfaction of the job. A decision that I recently made that involved marginal analysis was a very hard decision that I had to make. I had to choose to either spend 100 CHF on a pair of shoes or on a video game. At the end, I chose to spend it on the video game, since it was a new release while the shoes were a one-year old model. Even though, for many people, the smart choice would have been to buy the shoes, I am very happy with my decision. In this case, the marginal cost would be the 100CHF, which might not be a reasonable price for a video game. The marginal benefit would be my self-satisfaction.

  33. Thomason 26 Aug 2009 at 2:29 am

    Is the lawyer who mows his own lawn defying a fundamental rule of economics, that people act rationally? Is he making a mistake by not hiring the neighbor boy to do it for him?

    I think that it depends on how you see mowing the lawn, some people see it as being relaxing rather than being a chore. I see mowing the lawn as a chore so I believe that he should have hired the neighbor hood boy to do it so he could have done something fun.

    What is meant by opportunity cost? Give an example of a decision you have made recently that involved an opportunity cost.

    An opportunity cost is the value of activates or time to do activities in everyday cash. I consider all time I am not at school or doing homework and opportunity, so I pay for that by doing things faster.

    How is the lawyer’s decision whether or not to mow his lawn rooted in marginal analysis? Describe a choice you’ve made recently that involved marginal analysis.

    He sees the 20 as too big a price too pay for something that he can do easily. I will not take a bus too school when I can bike for no cost, but it takes me a much longer time to bike, when I could sleep in and take the bus.

  34. Gelando Makrideson 26 Aug 2009 at 2:43 am

    1.I think the lawyer was not acting irrationally because his idea of relaxation during his free time could have been to mow the lawn, which would mean that this would be a part of the leisure which his work would produce.

    2.Opportunity cost is something you give up for something else. For example I decided to watch a movie, and the opportunity cost was the opporunity of being able to study, do homework or spend leisure time in another way.

    3.The lawyer weighed his benefits and costs of mowing the lawn and decided that although he would save effort and time by paying a neighbor boy to mow his lawn he would rather do the work himself, for whatever reason. For example I wanted to buy an ice tea, but if i did that i wouldn't have any money left. I weighed the cost, my money, and the benefit, an ice tea, and decided I would rather have an ice tea than save my money for something else.

  35. Nicolo' Fanellion 26 Aug 2009 at 4:16 am

    1. Is the lawyer who mows his own lawn defying a fundamental rule of economics, that people act rationally? Is he making a mistake by not hiring the neighbor boy to do it for him?

    If the lawyer who mows his lawn thinks of this activity as a leisure, then I believe he is acting in a normal, rational way. During this period of time, he could have been enjoying the activity, whereas he might not even like watching TV or working out. Therefore, he is spending his time wisely doing something which he enjoys doing and which at the same time is useful.

    If the lawyer who mows his lawn thinks of this activity as work, he might be acting both rationally or irrationally. If he at the moment has other costs (buying a house, …) then he is doing the right thing, because he is saving up money which he might need for something else, even a small sum (has to save up for a long period of time). However, if he thought of lawn-mowing as a work he is most probably defying the rule of economics, that people act rationally, because it would cost him less hiring the boy to do it for him.

    Therefore, in order to find an answer to this 'impossible' question, one has to consider the various possible conditions of the lawyer which led to his choice.

    2. What is meant by opportunity cost? Give an example of a decision you have made recently that involved an opportunity cost.

    Time is scarce: it makes us age, we cannot live again moments of our life which are now past, we cannot go back and change something we have done that is wrong or something we regret. Last summer, I visited various places on vacation and thus the opportunity cost would have been spending time doing something else, staying in Zurich, working and gaining money or anything else. With that time I could also have been reading the books for this year’s English course or completing the math packet. Since I did not choose to do this, the result was that I had to finish the homework the days before school started. The explicit cost was the monetary cost for going on vacation. Even if the implicit cost had a bad impact on me at the end of the vacation, I enjoyed my choice of spending time on vacation.

    Opportunity cost is thus the second best possible choice after the chosen option, the option we have not taken.

    3. How is the lawyer’s decision whether or not to mow his lawn rooted in marginal analysis? Describe a choice you’ve made recently that involved marginal analysis.

    Marginal analysis means analyzing the benefits and costs of a certain good or service. I believe that the lawyer's decision is based on marginal analysis, because he thought that the benefit of mowing the lawn himself might save up the 20$ he would otherwise have to pay to the neighbor. The costs, in this case, would be that he is not mowing his lawn himself and thus the result would not have been as he wanted it to be and thus maybe he would have mowed the lawn again himself to have it perfect.

    This school year and the past one I analyzed the benefits and costs of using a laptop as a notebook. It helps me stay organized, keeping things in a single place, writing is easy to read and it has different functions all in a compact notebook. A notebook does not help me to be organized and my hand-writing is not very neat. Therefore, I decided that using a laptop would prove to be proficient for my organization, and thus I chose the best option, with the most benefits, using marginal analysis.

  36. Mhairion 26 Aug 2009 at 4:15 pm

    1. Is the lawyer who mows his own lawn defying a fundamental rule of economics, that people act rationally? Is he making a mistake by not hiring the neighbor boy to do it for him?

    I do not think that the lawyer is acting irrationally because he may consider mowing his lawn as a leisurely task. He could find it a nice change from the enviroment that he is put in to work everyday and therefore is nto obligated to pay his neighbour to do a job that he is happy to do himself.

    2. What is meant by opportunity cost? Give an example of a decision you have made recently that involved an opportunity cost.

    Opportunity cost is giving up something for something else. I recently gave up going out with my friends to spend an evening at home with my family. As I hang out with my friends often, I decided it was best to stay at home with my family as my brother won't be with us for much longer.

    3. How is the lawyer’s decision whether or not to mow his lawn rooted in marginal analysis? Describe a choice you’ve made recently that involved marginal analysis.

    Marginal analysis is the process of looking at the benefits and the costs. I used marginal analysis lately to decide if I should sleep in and catch a later bus to school (becuase I had a free morning), or to come in early and do some work which I had missed. I was very tired so I choose the best option which was to sleep in which meant that I had to find another time to do my work.

  37. Ray Remmerton 26 Aug 2009 at 4:32 pm

    1. Is the lawyer who mows his own lawn defying a fundamental rule of economics, that people act rationally? Is he making a mistake by not hiring the neighbor boy to do it for him?

    2. What is meant by opportunity cost? Give an example of a decision you have made recently that involved an opportunity cost.

    3. How is the lawyer’s decision whether or not to mow his lawn rooted in marginal analysis? Describe a choice you’ve made recently that involved marginal analysis.

    The lawyer is not acting irrational by mowing his own lawn. The lawyer is making a choice to mow his own lawn, which means he may enjoy the task and find it relaxing. The lawyer may also prefer to mow the lawn himself so he does not have to rely on somebody else to do a good job.

    Opportunity cost is doing the next best thing possible and ignoring the first option. Today I decided to come to school, at normal time, to work on homework even though I have free period first. The cost was not being able to sleep in.

    Marginal analysis is weighing the costs and benefits of doing something. The lawyers decision was rooted in marginal analysis because he had the opportunity to decide whether or not to mow the lawn himself or hire somebody. A choice I made recently was waking up early and coming to school today. Although I could have slept in I chose to come, so I could finish this homework. The cost was waking up and the benefit was doing my work, which is due.

  38. Nora Balbonion 27 Aug 2009 at 12:30 am

    1.Is the lawyer who mows his own lawn defying a fundamental rule of economics, that people act rationally? Is he making a mistake by not hiring the neighbor boy to do it for him?

    When looking at the opportunity cost, it seems irrational for the lawyer to mow his lawn, while he could be playing soccer or working out. The opportunity cost is so high because the lawyer has a high salary, and therefore his “time” is worth a lot more than the neighbor boy’s time. However, the lawyer might actually be enjoying himself and not loosing potential money, as mowing the lawn could be grouped into leisure time. This concept contradicts the idea of economics, where leisure and ‘work’ time are put into two different categories, and for one to occur, the other must be a trade-off. Human behavior, but especially human feelings, cannot be calculated, and therefore the lawyer’s happiness or satisfaction as he mows the lawn is not taken into account when looking at this example from an economist’s point of view.

    2.What is meant by opportunity cost? Give an example of a decision you have made recently that involved an opportunity cost.

    Opportunity cost is the value of something (it could be an activity, a food item, a friend, etc.) that you give up in order to have something else

    I recently decided to go to the movies on a sunny day, although I could have gone, and had planned to go, to the Strandbad. The opportunity cost of this decision was not going to the Strandbad on the sunny day.

    3.How is the lawyer’s decision whether or not to mow his lawn rooted in marginal analysis? Describe a choice you’ve made recently that involved marginal analysis.

    Marginal analysis is when the marginal benefit and the marginal cost of the different choices are compared when making a decision. The lawyer did use marginal analysis because he realized that the marginal cost of choosing to mow his lawn is doing activities of pure leisure. The lawyer felt that the marginal benefits of mowing the lawn, which are doing a pleasurable activity although it counts as an unpaid chore, saving 20$ that he would have paid the boy, and getting the lawn mowed, outweighed the costs.

    Every day after school I have the choice of either walking up to my house from the train station or taking the bus. I mostly chose to take the bus. The marginal costs of taking the bus are that I don’t get fresh air, I don’t get a work out, and I don’t have time to buy something at the Kiosk. The marginal benefits of taking the bus are that I get home earlier, so that I can do leisure activities for a longer period of time, it doesn’t make me tired, and I don’t have to carry my school bag up the hill.

  39. Silvia Dieteron 27 Aug 2009 at 2:09 am

    1. In my opinion the lawyer is not defying a fundamental rule of economics because it might be in his interest, mowing the lawn. Since he is working 50 hours a week in his office, it is healthy and nice to see some green grass in-between. Doing some physical work and saving the money he would have paid the neighbor boy seems rational to me. The only negative thing about mowing the lawn by himself is that he could have done other things in his interest, such as reading, watching television or meeting friends.

    2. The opportunity cost is when you give one thing up to have the other thing. For example, two days ago I fell asleep since I was so tired instead of doing my homework . Therefore the opportunity cost for falling asleep is the time where I could have done my homework.

    3. The lawyer's decision whether to mow his lawn or not is rooted in marginal analysis because he either could pay the boy to mow his lawn in order to have more spare time or he mows the lawn himself and saves money. Recently, I made a choice which involved marginal analysis when I did my homework instead of watching a DVD.

  40. Aniaon 27 Aug 2009 at 5:11 am

    1. I think that lawyer is not defying a fundamental rule of economics because maybe he really likes mowing his lawn. Maybe he really enjoys it and it makes him more relaxed. If someone work so much than he need to recover and I understand that. In my opinion it is natural that people want to do something apart from work. The best way how to recover from stress is to do something totally different after work. In this case he can switch of his brain and do some physical exercises.

    As far as making a mistake by not hiring the neighbor boy to do it for him I think he is doing a right thing. It’s not about saving money but about saving his health.

    2. Opportunity cost is the same as opportunity loss. Opportunity cost of making decisions is based on what we have to give up as a result of the decision. As an example opportunity cost is what I lost being online and thinking what I should write here when during this time I could talk with my friends.

    3. I see the relation of marginal analysis on the side of costs. 20$ compared with 100$ is a marginal loss for him but on the benefit side it’s a huge advantage for his health. Otherwise probably he would have to pay for the doctor in the future much much more.

    One example from my life could be analysis of investing 15minutes more per day of learning against better results in the school. Additional 15minutes spend on learning is a marginal increase of cost whereas probability of getting better result is really small.

  41. kvoskuilon 31 Aug 2009 at 3:34 am

    1. Over the years the difference between leisure and work has probably started to blur a little. I do not think that it is a wise choice to hire a neighborhood boy to mow his lawn. First, of all if the lawyer mows his lawn himself he is, in a way, earning money. He made the decision not to hire the boy so that he saves the 20 dollars by mowing the lawn himself. The next point is, the lawyer might enjoy mowing his lawn, for the pictures point of view, I mean, who would not enjoy sitting on a mini tractor and mow his lawn. Mowing his lawyer might possibly be his leisure time because he enjoys it. I do not think that the lawyer is making a mistake by not hiring a neighborhood boy because he is saving money as well as possibly enjoying himself.

    2. Opportunity cost means that the lawyer could be doing something else in the mean time instead of mowing his lawn. He could be relaxing or playing sports with his friends while the neighborhood boy mows his lawn. An example of my opportunity cost would be playing rugby afterschool. I would play rugby and not do my homework as thoroughly as possible because I would run out of time. If, on the other hand, I had not gone to rugby practice and went straight home afterschool I would have done my homework more thoroughly than if I had played rugby. The opportunity cost would be doing my homework thoroughly.

    3. Marginal analysis is the decision made benefiting the short run but not so much the long run. Lately, I found myself choosing whether to do my homework or whether to choose to play my computer. Naturally, I choose to play on my computer because that would benefit me the most because I was unhappy with the amount of homework I had to do. In the long run though I knew that if I did my homework it would benefit me more than playing my computer. So the marginal analysis would be to play my computer instead of doing my homework because it suited my mood better.

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