Access over 20 million homework & study documents

Answer

Content type
User Generated
Subject
Economics
School
Kean University
Type
Homework
Rating
Showing Page:
1/2
1)
I am a baker and I want a Ferrari; I am going to work like mad baking bread because I need a lot
of money to buy the car. I just care about getting more for myself. I have self-interest and
because I want more, I work hard making more bread as efficiently as possible to bring in money
to me. My hard works directly benefits me but it also benefits society. Through working hard, I
produce more and more products for the society which will improve the conditions of the society
at large. When several individuals like me work in their self-interest, better financial decisions
are taken, and goods and services are created that benefit both consumers and producers. Overall,
decisions made with rational self-interest are generally made based on financial prudence and
economical satisfaction. I will sell my baked products and buy goods like Ferrari. These
voluntary exchanges are based largely on actions made in self-interest and will improve the
conditions of Ferrari seller and those who work for him. Such transactions will gradually benefit
large number of individuals and thus, the entire society
2)
Utility maximization refers to the concept that individuals and firms take economic decisions
which give them maximum satisfaction. For example, when deciding how to spend a fixed some,
individuals will purchase the combination of goods/services that give the most satisfaction.
While self-interest implies benefitting yourself but not at the expense of the others.
In a free-market economy, utility-maximization and self-interest dominate the economy where
goods and services are exchanged freely. These forces drive the supply and demand of goods as
well as value through price discovery. They also lead to innovation. The actions of producers and
consumers taken in self-interest and for utility maximization manifest societal benefits at large

Sign up to view the full document!

lock_open Sign Up
Showing Page:
2/2

Sign up to view the full document!

lock_open Sign Up
Unformatted Attachment Preview
1) I am a baker and I want a Ferrari; I am going to work like mad baking bread because I need a lot of money to buy the car. I just care about getting more for myself. I have self-interest and because I want more, I work hard making more bread as efficiently as possible to bring in money to me. My hard works directly benefits me but it also benefits society. Through working hard, I produce more and more products for the society which will improve the conditions of the society at large. When several individuals like me work in their self-interest, better financial decisions are taken, and goods ...
Purchase document to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Anonymous
Excellent resource! Really helped me get the gist of things.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4