Archive for August 28, 2009

The Right to Life – Germany

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a) The opportunity cost of treating the leukemia patient is that you cannot treat other patients who would have high chance of surviving.

b) The opportunity cost of not treating him would be you could treat other patients who have high chance of survive.

c) It can be justified in an economic point of view. The opportunity cost is way more beneficial than treating the patient.

d) This is a typical case in a sense that you have to make choices that has best utility.

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Opportunity Cost

  1. Reservation price is what the price in your mind you are willing to pay for making some decision.
  2. Economists use cost benefit analysis to make decisions.
  3. Utility is enjoyment or satisfaction you get from making economic decisions.
  4. Opportunity cost is a potential cost that is caused by making a decision. It is the next best alternative decision.
  5. People tries to maximize their utility.

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