Decision Making on the Margin Involves

question 112

Multiple Choice

Decision making on the margin involves

• A) eliminating the additional cost when making a decision.
• B) comparing the total cost and the total benefit when making a decision.
• C) comparing the marginal cost and marginal benefit when making a decision.
• D) comparing the benefits for the social interest to the benefits for the person's self-interest.
• E) determining the total benefit of a decision.

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Definitions:

Future Value

The value of an asset or amount of money at a specific date in the future that is equivalent in value to a specified sum today.

Rate of Interest

Another term for interest rate, it specifies the amount charged, expressed as a percentage of the principal, by a lender to a borrower for the use of assets.

Rate of Return

A rise or fall in an investment's value during a specified time, shown as a percentage of the cost of the investment.

Trust

A legal arrangement in which one party holds property or assets for the benefit of another, guided by the terms set in the trust agreement.