Which of the Following Statements Most Fully Explains a Driver's

question 169

Multiple Choice

Which of the following statements most fully explains a driver's decision, as discussed in the Case in Point on Changing Lane and Raising Utility, to pay to use a highway express lane?

• A) The total utility of using the lane must be greater than zero.
• B) The marginal utility per dollar on using the lane must be greater than zero.
• C) The marginal utility per dollar spent on the lane must be equal to the price per gallon of gasoline plus associated driving costs.
• D) The marginal utility per dollar spent on the lane must be greater than the marginal utility per dollar spent on the next best alternative.

Understand the relationship between natural resources and standard of living.

Distinguish between renewable and nonrenewable resources.

Recognize how factors of production contribute to differences in economic growth between countries.

Understand the concept of returns to scale in production.

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Definitions:

Price Mechanism

The process by which prices adjust to equilibrate supply and demand, guiding economic actions and resource allocation.

External Cost

A cost that is not borne by the parties directly involved in an economic transaction but by a third party or the environment.

Market System

A market system where investment, production, and distribution decisions are made according to supply and demand, and the prices for goods and services are established within a free pricing mechanism.

Mississippi River

The Mississippi River is a major North American river, flowing south from northern Minnesota to the Gulf of Mexico and serving as a key geographical and economic artery in the United States.