A Person Who Uses a Rule of Thumb to Determine

question 23

Multiple Choice

A person who uses a rule of thumb to determine the best rate of savings:

• A) is necessarily making a mistake, since finding the best rate of savings involves complex mathematical models.
• B) is necessarily making a mistake, since there is no single best rate of savings.
• C) is not necessarily making a mistake because rules of thumb often arise out of trial and error or from observation of others' successful decisions.
• D) is not necessarily making a mistake because, in the long run, all rates of savings turn out to yield the same economic benefit.

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Definitions:

Pollution

The presence in or introduction into the environment of a substance or thing that has harmful or poisonous effects.

Marginal Social Benefit

The additional benefit society gains from consuming one more unit of a good or service.

Marginal Social Cost

The additional cost imposed on society as a whole by producing one extra unit of a good or service.

Pollution

The addition of pollutants to the natural surroundings, leading to harmful alterations.