Questions and Answers
A marginal change is a
A rational decision-maker takes an action if and only if
Economists use the word equality to describe a situation in which
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
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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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Description
Test your knowledge of key concepts in microeconomics with this quiz. Each question focuses on important definitions and principles that underlie marginal changes and decision-making. Perfect for students aiming to consolidate their understanding of microeconomic theory.