ALL WORK MUST BE ORIGINAL AND NO PLAGIARISM!!!1. Self-intere

ALL WORK MUST BE ORIGINAL AND NO PLAGIARISM!!!1. Self-interest and Economic ChoicesThe concept of rational choice is a frontier of economic theory. A fundamental assumption for economic analysis is that economic agents, a household and a firm, tend to make the best choices from among viable alternatives, given the available resources at their disposals (money, time, etc.) and information.The rational economic choice implies that people are driven by the rational pursuit of self-interest, and engaged in economic decisions to maximize this rational self-interest. Self-interest is individual’s economic decisions that are made to fulfill individual’s best interest. On the other hand, social interest indicates choices that are made to benefit society as a whole. Economists argue that social interest can be attained by individual decision makers acting in their own self-interest. This process is what Adam Smith called the invisible hand, which is the foundation of the theory of the market economy.• Give an example to demonstrate how a firm acting out of self-interest to maximize its profits by offering goods or services in economic markets benefits consumers – even if it does not care about them. In other words, how does self-interest help achieve society’s economic goals?• What is the relationship between self-interest and social interest in the economic decision (economic choice) process? Is there a conflict between the two in the economic world?• Do people always make rational decisions? What are the factors that lead to bounded rationality? What are the factors that lead to irrational economic decisions?2. Creative DestructionEconomist Joseph Schumpeter, who taught at Harvard from 1932 until his death in 1950, popularized the term “creative destruction” to describe the capitalist process in which entrepreneurs introduce new goods and services to economic markets that displace existing goods and services. Though this innovative process results in increased wealth and better standards of living overall, not everybody benefits equally. The opportunity cost of buying a newly available product is the use of the old one that has been given up, so those in the camp of the new, different, and desirable do very well, while those camped out with the old and no longer desirable products see their prospects decline.Provide an example of creative destruction you have witnessed during your lifetime and describe what the benefits and costs to the economy have been. Who was enriched and whose fortunes declined?