Tony notes that an electronics store is offering a flat $20 off all prices in the store. Tony reasons that if he wants to buy something with a price of $50, then it is a good offer, but if he wants to buy something with a price of $500, then it is not a good offer. This is an example of:
A. inconsistent reasoning because prices are sunk costs.
B. inconsistent reasoning; saving $20 is saving $20.
C. rational choice because saving 40 percent is better than saving 4 percent.
D. the proper application of the Cost-Benefit Principle.
Answer: B
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A) competitive; loophole mining B) competitive; innovation C) regulated; loophole mining D) regulated; innovation
The classical model indicates that at the equilibrium interest rate, saving is
A) equal to investment. B) greater than investment. C) unnecessary for investment. D) less than investment.
Spending VCU4 on real-world goods and services causes the nation's:
a. M2 money supply to remain the same. b. M2 money supply to rise. c. M2 money multiplier to rise. d. M2 money supply to fall.
If the price of pork chops falls from $8 to $6, and this leads to an increase in demand for apple sauce from 100 to 140 jars, what is the cross-price elasticity of apple sauce and pork chops at a pork chop price of $6?
A. -1.17 B. 2.71 C. 0.42 D. -0.86