ECON 2020—Macroeconomics
Name:
s
Assignment Designation:
Question # 1. What is meant by the term “utility” and how does it
relate to purposeful behavior?
What is an opportunity cost? How does the idea relate to the definition
of economics?
Which of the following decisions would entail the greatest opportunity
cost: Allocating a square block in the heart of New York City for a
surface parking lot or allocating a square block at the edge of a typical
suburb for such a lot? Explain.
Answer: The term utility refers to the amount of satisfaction or
happiness that one derives from consuming a good or service. This
directly correlates with purposeful behavior; which describes the
propensity for individuals to look to increase their utility by weighing
costs and benefits that lead to “purposeful behavior”.
Opportunity cost describes how there is always a “next best”
Alternatives and Choices
