Which of the following predictions appear(s) to follow from a model based on the assumption that rational, self-interested individuals respond to incentives?1) For every 10 exam points Myrna must earn in order to pass her economics course and meet her graduation requirements, she will study one additional hour for her economics test next week
-----------------------------------A coin toss will best predict Leonardo's decision about whether to purchase an expensive business suit or an inexpensive casual outfit to wear next week when he interviews for a high-paying job he is seeking
-----------------------------------3) Celeste, who uses earnings from her regularly scheduled hours of part-time work to pay for her room and board at college, will decide to buy a newly released DVD this week only if she is able to work two additional hours.

This is a Model. The reason behind this is the decision or the conclusion made is base on the realistic data collected. It states that the person has to spend one additional hour in order to earn 10 exam points or exam requirements. This is a statement which is realistic and can be practically tested using Empirical tests to test its statements.

Part b.

This is not a model. The reason behind this is the decision whether to purchase an expensive business suit or inexpensive one do not involve any realistic data. Also. the test used in the decision making process is tossing a coin; which is no way connected to the data collected. In this case. the decision making process is probability test which is the statistical process of obtaining a decision but it is no way empirical.

Part c.

This is a Model. The reason behind this is the decision making process involves past realistic data. In this case. the person allocates her total income to pay her college and room. Her decision to buy a DVD involves working two additional hours is an empirical testing which can be determined using the given data.

jepessoa jepessoa · Answer 2 · 2020-02-08T17:29:43+01:00

Answer:

1) For every 10 exam points Myrna must earn in order to pass her economics course and meet her graduation requirements, she will study one additional hour for her economics test next week

3) Celeste, who uses earnings from her regularly scheduled hours of part-time work to pay for her room and board at college, will decide to buy a newly released DVD this week only if she is able to work two additional hours.

Explanation:

One of the basic premises of economics is that individuals are rational and that they carry out their activities in order to maximize their benefits while lowering their costs. E.g. you purchase goods that provide the largest benefits for every dollar spent.

1) Myrna can decide to either study for her test or do something else. That means that the opportunity cost of doing something else for one hour are 10 exam points, and the opportunity cost of studying are not doing anything else during one hour. Her incentive is to pass her economics course and to do so she must obtain higher grades, therefore she is willing to trade one hour of doing something else in exchange for studying and getting a better grade.

3) Celeste wants to buy a new DVD, but she doesn't have enough spare money and her opportunity cost of purchasing it would be not being able to pay all her room and board expenses. Therefore, in order for her to buy the new DVD, she is willing to work two additional hours this week. She will exchange two hours of work for the DVD.