Joe Sold Gold Coins for $1,000 That He Bought a Year

question 19

Multiple Choice

Joe sold gold coins for $1,000 that he bought a year ago for $1,000. He says, "At least I didn't lose any money on my financial investment." His economist friend points out that in effect he did lose money because he could have received a 3 percent return on the $1,000 if he had bought a bank certificate of deposit instead of the coins. The economist's analysis in this case incorporates the idea of

• A)opportunity costs.
• B)marginal benefits that exceed marginal costs.
• C)imperfect information.
• D)normative economics.

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Definitions:

Subjective Feelings

Subjective feelings refer to personal perceptions of emotions and sensations that are not observable by others, including individual internal experiences of happiness, sadness, pain, and pleasure.

Group Needs

Refer to the requirements and desires shared by members of a group, crucial for the group’s cohesion and functionality.

Selection Effect

Refers to a bias introduced into research when individuals are not randomly assigned, leading to non-comparable groups.

Peers

Individuals of similar age, status, or interest, often considered equals within a specific context.