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Questions and Answers
A marginal change is a
A marginal change is a
- Change for the worse, and so it is usually a short-term change.
- Small, incremental adjustment. (correct)
- Large, significant adjustment.
- Change that involves little, if anything, that is important.
A rational decision-maker takes an action if and only if
A rational decision-maker takes an action if and only if
- The marginal cost of the action is zero.
- The marginal cost of the action exceeds the marginal benefit of the action.
- The opportunity cost of the action is zero.
- The marginal benefit of the action exceeds the marginal cost of the action. (correct)
Economists use the word equality to describe a situation in which
Economists use the word equality to describe a situation in which
- Each member of society has access to abundant quantities of goods and services, regardless of his or her income.
- Each member of society has the same income. (correct)
- Society's resources are used efficiently.
- Society is getting the maximum benefits from its scarce resources.
For most students, the largest single cost of a college education is
For most students, the largest single cost of a college education is
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Mitch has $100 to spend and wants to buy either a new amplifier for his guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $100, so he can only buy one. This illustrates the basic concept that
Mitch has $100 to spend and wants to buy either a new amplifier for his guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $100, so he can only buy one. This illustrates the basic concept that
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Study Notes
Marginal Changes
- A marginal change refers to a small, incremental adjustment in decision-making.
Rational Decision-Making
- Rational decision-makers act when the marginal benefit of an action exceeds its marginal cost.
Equality in Economics
- Equality describes a scenario where each member of society receives the same income.
Efficiency in Resource Use
- Economic efficiency occurs when society maximizes benefits derived from scarce resources, optimizing their use.
Cost of College Education
- The largest expense for students in college is typically the opportunity cost of foregone wages during their studies.
Opportunity Cost Factors
- The opportunity cost of attending college is highest for individuals with significant earning potential, such as a successful actor taking time away from their career.
Trade-offs in Decision-Making
- A scenario where an individual must choose between two equally priced items (e.g., an amplifier or mp3 player) highlights that people face trade-offs in their decisions.
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