state Saved Help Save & Exit Submi This chapter focused on individuals who work
ID: 1119120 • Letter: S
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state Saved Help Save & Exit Submi This chapter focused on individuals who work for an employer. But in March 2011 almost 9 million Americans reported that they were self-employed-that is, they worked for themselves. This raises an interesting question Should more young people be willing to try starting their own businesses? Bill Gates was 20 years old when he started Microsoft. Sergei Brin and Larry Page were 25 when they founded Google. Inexperience and youth didn't seem to stop them from becoming billionaires well before the age of 30. On the other hand, most new businesses either fail or don't produce a profit for several years. a) what are the advantages of starting ar new business when you are young? (Hint Consider opportunity cost) An advantage of starting a new business when you are young is that O young people have better social networks O there is a lower opportunity cost because less experience results in lower wages. O young people have more energy there is a higher opportunity cost because more creativity results in higher wages b) What are the disadvantages of starting a new business when you are young? (Hint: Think about the different skills you might need.) A disadvantage of starting a new business when you are young is that younger people have not had time to develop the skils needed to foster a business to success younger people may not have worked very many jobsExplanation / Answer
There is lower opportunity cost because less experience results in lower wages.
Wage depends positively on experience. Wage rises with experience. Young individuals are offered lower wages. The decision that affects whether the individual starts business or do a job depends on how much income he can make from doing job.
When wage is low he is more likely to start the business.
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