Because people make decisions at the margin, when deciding whether to purchase a second car, they would therefore compare: the dollar cost of having two cars with the potential income the two cars may generate. None of the answers is correct. the additional benefits expected from a second car with the total cost of the two cars. the additional benefits expected from a second car with the additional costs of the second car.

Question

Business

Eliana Gilbert

9 April, 22:18

Because people make decisions at the margin, when deciding whether to purchase a second car, they would therefore compare: the dollar cost of having two cars with the potential income the two cars may generate. None of the answers is correct. the additional benefits expected from a second car with the total cost of the two cars. the additional benefits expected from a second car with the additional costs of the second car.

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Answers (1)

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Lynx · Answer 1

The correct answer is letter "B": None of the answers is correct.

Explanation:

Marginal decisions imply considering two factors: total benefits and total costs. A rational choice would imply going ahead with a decision if the total benefits are greater than the total costs and discarding a decision when the total costs are higher than the total benefits.

Therefore, while deciding to buy a second car, it must be considered if the total benefits of having two cars are greater than the costs of owning two cars.