QQuestionBusiness Management
QuestionBusiness Management
"Marginal thinking is best demonstrated by:
A. Choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time.
B. Measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake.
C. Acquiring the information relevant to a choice before making that choice.
D. Deciding to never purchase a coat made with animal skins or furs."
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Answer
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Step 1:Let's solve this problem step by step:
Step 2:: Understand the concept of marginal thinking
Marginal thinking involves analyzing the additional (marginal) benefits and costs of a specific decision, focusing on the incremental impact of one more unit or one more hour of an activity.
Step 3:: Analyze each option carefully
Option A: $$\checkmark$$ This is the best example of marginal thinking
- The decision involves weighing the additional (marginal) benefit of studying one more hour against the opportunity cost of that time - The person is considering the incremental improvement in quiz performance versus the time sacrificed - This precisely captures the essence of marginal decision-making by evaluating the additional benefit of one more unit of effort Option B: Partially demonstrates marginal thinking - Involves comparing costs and benefits - But less focused on the incremental change typical of marginal thinking Option C: Not marginal thinking - This describes information gathering before a decision - Does not specifically address incremental analysis Option D: Not marginal thinking - This is an ethical decision about purchasing - Does not involve analyzing additional benefits or costs
Step 4:: Confirm the reasoning
Marginal thinking is fundamentally about: - Evaluating the additional benefit of one more unit - Comparing the incremental cost versus the incremental benefit - Making decisions at the margin
Final Answer
A is the correct representation of marginal thinking, as it demonstrates analyzing the additional benefit of one more hour of study against its opportunity cost.
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