Rational People Make Decisions "At the Margin" by Comparing

question 34

Multiple Choice

Rational people make decisions "at the margin" by comparing

• A)average costs and benefits.
• B)total costs and benefits.
• C)additional costs and benefits.
• D)opportunity costs and benefits.

Identify and decide when to use parameters versus statistics.

Understand the impact of sample size on statistical measures.

Recognize calculations errors specifically with variance and standard deviation.

Understand the effect of outliers on statistical measurements.

---

Definitions:

External Cost

A cost that affects parties who are not directly involved in a transaction, leading to negative outcomes like pollution that are not reflected in market prices.

Coal-Powered

Refers to machines, plants, or devices that operate or are fueled by coal.

Electrical Generator

A device that converts mechanical energy into electrical energy, typically through rotating a coil within a magnetic field.

Externality

A cost or benefit arising from an economic activity that affects third parties who did not choose to incur that cost or benefit.