ECS2601 Assignment 1 Semester 2 2026 – Due 11 August 2026

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ECS2601 ASSIGNMENT 1 2026
DUE 11 AUGUST 2026

Question 1
1.1 In your own words, explain the idea of trade-offs in microeconomics.
In microeconomics, trade-offs refer to the choices that consumers, workers, and firms
must make because resources are limited or scarce. Consumers have limited incomes
and must decide how to allocate their money across different goods and services –
buying more of one good means buying less of another. Workers face trade-offs
between working now (earning income) versus pursuing further education (hoping for
higher future income), and between labour and leisure time. Firms face trade-offs in
deciding what products to produce, how much to produce, and which combination of
inputs (labour, capital, raw materials) to use. These trade-offs require decision-makers
to weigh costs and benefits to make optimal choices given their constraints.
(Pindyck & Rubinfeld, Chapter 1, p. 26-27)