The Average Price of Gasoline in Your Neighborhood Is $2

question 78

Multiple Choice

The average price of gasoline in your neighborhood is $2.15 per gallon.Your neighbor, Diana tells you that you can "save a lot" by frequenting a gas station 20 miles outside your neighborhood where the price of gasoline is $2.06 per gallon However, she cautions you that there are usually long lines at that station.Is her suggestion beneficial to you?

• A)Yes, since gasoline is a necessity for car owners, the total cost savings would be relatively substantial.
• B)No, if one factors in the non-monetary opportunity costs (driving time and waiting in line), it could prove more costly to go to the lower-priced gasoline station.
• C)Yes, the lower price of gasoline at the rival station increases my purchasing power and enables me to consume more of other goods.
• D)No, my friend is misled; clearly, the lower-priced gasoline must be of inferior quality and could damage vehicles.

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Definitions:

Gordon Allport

A pioneering figure in psychology, known for his theory of personality that emphasized the uniqueness of the individual and the concept of personal dispositions.

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A psychologist known for his work in personality theory, including the development of the trait theory of personality.

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The scientific study of the composition, structure, properties, and reactions of matter.