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The Challenges of Economics

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The Challenge of Economics
Q1: What opportunity costs did you incur in reading this chapter? This chapter talks about the challenge of economics. I will attach a file that has summary in it and another page you may need.
Opportunity cost of a resource according to economists is the cost of the next best alternative use of that particular resource. For example, I have spend time reading this chapter. I could have spend this time doing something else like watching a movie or doing some freelance work. It seems that my next-best option to reading this chapter is watching a movie or working freelance, therefore the opportunity cost of reading this chapter is the time spent plus the pleasure I relinquish by not watching a movie. Or it could the money I forgo by not working freelance.

Q2: If taxes on rich were raised to provide more housing for the poor, how would the willingness to work be affected? What would happen to total output?
The issue of raising the taxes of the rich has been a centre of high political debate. Just recently, billionaire Warren Buffet made a proposal to the Congress to raise the taxes of the rich so as to reduce America’s current budget deficit. In other fronts, raising the taxes of the rich is also seen as a way of reducing the wide gap between high income earners and low income earners. In our case, we are trying to analyze the implications of tax increases on high income earners in a situation where a transfer is made to improve housing for the poor. By doing this, it means that the standards of the poor are somehow improved. According to me, this is just a single approach to the multifaceted problem of raising the standards of living of low income earners. A question of concern would be the motive behind raising the taxes of the rich. How about it’s effect on output? Economists have argued that tax increases doesn’t necessarily

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