Making Choices on the Margin Means

question 119

Multiple Choice

Making choices on the margin means

• A) scribbling on the edges of your notebook paper.
• B) comparing all relevant alternatives systematically and incrementally.
• C) making a decision based on emotions.
• D) making decisions in the largest possible increments.
• E) taking account of all marginal benefits, all opportunity costs, and all sunk costs.

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Definitions:

Long Run

A period of time in economics where all factors of production and costs are variable, and all market adjustments have been made.

Futures Contracts

Standardized legal agreements to buy or sell something at a predetermined future date and price, typically used for commodities or financial instruments.

Forward Contracts

Non-standardized contracts between two parties to buy or sell an asset at a specified future time at a price agreed upon today.

Default Free

An investment that is considered to have no risk of failure to pay back principal or interest.