1A. When people act in their self-interest they try to maximize their net benefits. These net benefits do not have to be monetary. Therefore, if Martha feels like giving away 20 dollars for helping poor families brings her more satisfaction than spending the 20 dollars in another way, she is acting in her own self-interest in an attempt to maximize her net benefits.
1B. This statement is false. In economics opportunity costs do not have to be monetary and this is why helping in the community center has costs for Martha. In this case the cost for Martha is the two hours that she spends in the community center. If she did not use these two hours helping in the community centre, she could use her time doing something else she wants. In this case her opportunity cost is time.
1C. In economic terms acting rationally depends on the person’s view of net benefits. If Oscar feels like a hundred dollar donation is
…show more content…
The US should have a flat income tax because a flat tax motivates people to work harder as the taxation percentage does not increase if you work more and receive higher income.
2B. A progressive income tax is more desirable for any country because it reduces income equality as people with higher incomes must pay more taxes than people with lower incomes.
2C. In an economic system with a flat tax system a government has to implement less regulations on taxation because everyone pays the same percentage of taxes from their income. This means that a government with a flat tax income system needs to use less of its resources on tax regulations.
2D. In an economic system with a progressive income tax system the people with lower incomes pay less taxes percentage wise, meaning that they have more disposable income to stimulate the economy.
3A. Sunk cost is a cost of a decision made in the past. Sunk costs are not a part of the opportunity cost because the decision was made in the past and there is no way to avoid the costs of that decision at the