“Economists assume people are selfish.”

  1. “Economists assume people are selfish.” Explain the extent wo which this statement is true and the extent to which it is false.
  2. “Rational, self-interested people would never end up worse off by any decision they make. Obviously, people often make mistakes or have regrets. Therefore, people do not act rationally or out of self-interest.” Explain the extent wo which this statement is true and the extent to which it is false.
  3. According to a survey, people want safer cars and say they are willing to pay substantially more for safer cars. Using this information, one car company adds safety features to its car, raising the price by several thousand dollars. What is the potential problem with this strategy?
  4. Suppose that nuclear power plants are banned. Explain the opportunity costs of this decision? Also, what opportunities does this generate for other facets of the economy?

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