The Optimal Amount of Information to Acquire Before Making a Purchase

question 54

Multiple Choice

The optimal amount of information to acquire before making a purchase is

• A)zero.
• B)as much as technically possible.
• C)an amount such that the total cost of acquiring information equals the total benefit.
• D)an amount such that the marginal cost of acquiring information equals the marginal benefit.

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Definitions:

Entrepreneurship

The act of starting and managing a business venture, along with any of its risks, in order to make a profit and innovate in the market.

Financial Capital

The money, credit, and other forms of funding that businesses use to invest in resources for future growth.

Opportunity Cost

Waiving prospective gains from various alternatives by settling on one option.

Foregone Alternative

The option or course of action that is given up when another is chosen; closely related to the concept of opportunity cost.