Billie Jean has $120 to spend and wants to buy either a new amplifier for her guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $120, so she can only buy one. This illustrates the basic concept that
a. trade can make everyone better off.
b. people face trade-offs.
c. rational people think at the margin.
d. decisions made at the margin are not particularly important.
b
You might also like to view...
Which of the following statements is correct?
A. Theory and hypothesis are interchangeable terms for the same thing. B. A hypothesis may result from a tested and confirmed theory. C. A theory may result from a tested and confirmed hypothesis. D. A hypothesis is a theory whose formulation relies on mathematics.
Aggregate expenditure includes consumption spending, unplanned investment spending, government purchases, and net exports
Indicate whether the statement is true or false
Why would a firm prefer that a company like J.D. Power (which provides product satisfaction reviews) review its product rather than doing it within the firm?
A) J.D. Power provides less credibility. B) J.D. Power provides greater credibility. C) J.D. Power is more honest than the average firm. D) J.D. Power has a government monopoly in providing product satisfaction reviews.
Suppose the market demand for milk is Qd = 150 - 5P. Additionally, suppose that a dairy's variable costs are VC = 2Q2 (where Q is the number of gallons of milk produced each day), its marginal cost is MC = 4Q and there is an avoidable fixed cost of $50 per day. In the long run there is free entry into the market. Suppose the demand for milk doubles. What is the new long-run equilibrium price?
A. $20 per unit B. $40 per unit C. $24 per unit D. $2 per unit