Mitch Has $100 to Spend and Wants to Buy Either

question 188

Multiple Choice

Mitch has $100 to spend and wants to buy either a new amplifier for his guitar or a new mp3 player to listen to music while working out.Both the amplifier and the mp3 player cost $100,so he can only buy one.This illustrates the basic concept that

• A) trade can make everyone better off.
• B) people face trade-offs
• C) rational people think at the margin.
• D) people respond to incentives.

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Definitions:

Cingulate Cortex

A part of the brain situated in the medial aspect of the cerebral cortex, involved in emotional processing, learning, and memory.

Hippocampus

A major component of the brain involved in forming new memories and is associated with learning and emotions.

Endorphins

Natural, pain-relieving chemicals produced by the body that also contribute to feelings of pleasure and well-being.

Agonist

An agonist is a chemical or drug that binds to receptors in the brain and causes a reaction, often mimicking the action of naturally occurring substances.