Tony Notes That an Electronics Store Is Offering a Flat

question 68

Multiple Choice

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,it is a good offer,but if he wants to buy something with a price of $500,it is not a good offer.This is an example of

• A) inconsistent reasoning;saving $20 is saving $20.
• B) the proper application of the cost-benefit principle.
• C) rational choice because,in the first case,he saves 40% and,in the second case,he saves 4%.
• D) "marginal cost equals marginal benefit" thinking.
• E) opportunity costs.

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Definitions:

Percent Increase

The percentage that represents the proportion of growth from the initial value to an increased amount.

Hourly Rate

The sum of money received for every hour worked.

Unit Price

The cost per single unit of an item or investment.

Percent Change

The measurement of the relative change of a quantity, expressed as a percentage, to denote increase or decrease from one period to another.