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; saving $20 is saving $20.
B. rational choice because saving 40 percent is better than saving 4 percent.
C. inconsistent reasoning because prices are sunk costs.
D. the proper application of the Cost-Benefit Principle.
Answer: A
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Suppose that Rosa is considering migration to another country. To move, she will have to spend $5000 on transportation and $4000 in application and other processing fees. Rosa's stream of future earnings in her home country is $500,000. She expects to earn a stream of future earnings of $800,000 in another country. Based on this information, Rosa's explicit cost of migrating is:
A. $9,000 B. $500,000 C. $507,000 D. $5,000
A student makes the following statement: "The real problem with pure public goods is that they are nonrival and nonexcludable." Explain whether you agree or disagree with the student's statement
What will be an ideal response?
Open market purchase of government securities results in:
A) an increase in bank reserves. B) a decrease in bank reserves. C) an increase in interest rates. D) none of the above.
In order to understand when a model may not be accurate, which is not an important action to take?
A. Identify what important details were omitted when developing a model. B. Make sure assumptions made in the model are clear and accurate. C. Test the model for accuracy. D. Make sure the model all includes all possible details.