The Difference in Total Costs Between Two Alternatives Is Referred

question 38

Multiple Choice

The difference in total costs between two alternatives is referred to as the

• A) incremental cost.
• B) sunk cost.
• C) opportunity cost.
• D) direct cost.

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Definitions:

Indifference Curves

A graph showing a series of lines that represent different bundles of goods between which a consumer is indifferent.

Diminishing Marginal

Refers to a principle where the marginal gain (such as utility or productivity) from an additional unit decreases as more units are consumed or produced.

Transitivity

Transitivity in decision-making implies that if a person prefers option A over B, and B over C, then the person should also prefer A over C, forming a consistent order of preferences.

Completeness

In decision theory, the idea that every set of choices can be ranked in an order of preference, allowing for a consistent choice under different scenarios.