Joe Sold Gold Coins for $1,000 That He Bought a Year

question 60

Multiple Choice

Joe sold gold coins for $1,000 that he bought a year ago for $1,000. He says, "At least I didn't lose any money on my financial investment." His economist friend points out that in effect he did lose money because he could have received a 3 percent return on the $1,000 if he had bought a bank certificate of deposit instead of the coins. The economist's analysis in this case incorporates the idea of

• A) opportunity costs.
• B) marginal benefits that exceed marginal costs.
• C) imperfect information.
• D) normative economics.

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