Question

Dmitri is training for a triathlon, a timed race that combines swimming, biking, and running. Consider the following sentence: Because his pool sessions are helping him swim more quickly, Dmitri plans to reduce by 1 hour per week the time he spends training on the bike and increase by 1 hour the time he spends in the swimming pool; however, his wife says that he should stop doing any biking and running and spend all 20 hours per week in the pool. Which basic principle of individual choice does Dmitri's plan illustrate that his wife's advice does not?

Answer 1

Answer:

Decision on the margins

Explanation:

Pool time seems to be having a greater effect at the moment, it makes sense for his to spend a bit more time in the pool and a bit less time on the bike.

However, this does not mean that it makes sense for her to spend all his time in the pool and no time on the bike. If he cut out all training on the bike, the value of a little bit of bike training might be higher than the value of the last hour of pool training. Dimitri does not treat biking versus swimming as an all-or-nothing decision. He makes small changes at the margin in the number of hours spent training for each activity.

Also they both realise that his time is fixed (20hrs) and anytime he wants to spend extra on one activit, is time he cannot spend on another (opportunity cost).

They are both trying to improve Dimitri's total time (exploiting opportunities to makes themselves better off).

An assumption that Dimitri realises that as he spends more time in the pool improving his swim time, his run and cycle times will suffer. As he swims more, his improvement is likely to slow down, while spending less time on cycling and running will cost him progressively more in terms of time.

Conclusion Dimitri is looking at the margins. His wife on the other hand, is not, she is ignoring the interaction, may be forgetting the decreasing improvements in swim and increasing deterioration in the other 2 legs.

Answer 2

Answer:

Decisions are made on the margin.

Explanation:

In order to determine which actions Dimitri should undertake, he must first do a benefit cost analysis. The actions that generate more benefits than costs should be taken. If he want to maximize her benefits from his available resources (training time), he should chose the actions whose marginal benefits exceed their marginal costs.

Dimitri should spend as much time in the pool as possible, as long as it doesn't hurt his total performance including his running and biking performance.

In economics, all our decisions are made in the margin because we only care about the things that we can control and that means current or future events, past events are not controllable. That is why economics always works in the margin, since we must decide on which choice provides the greatest benefit at that moment, not which decision provided the largest benefit in the past.