Rational behavior requires thinking at the margin. Which example represents this type of thinking?
A) deciding whether a second burger is worth the extra $2
B) deciding whether the overtime pay is worth working on your day off
C) deciding whether to pay a fine for polluting the local harbor or installing antipollution machinery
D) All of these examples represent thinking at the margin.

Question

Quizplus · Accepted Answer

All three examples involve weighing the additional costs and benefits of a specific decision. In option A, the cost of a second burger is the additional $2, and the benefit is the satisfaction of eating the burger. In option B, the cost is working on your day off, and the benefit is the additional income from the overtime pay. In option C, the cost is either paying a fine or installing antipollution machinery, and the benefit is avoiding the negative consequences of polluting the harbor. In all three cases, thinking at the margin involves weighing the additional cost and benefit of a specific decision.

Rational Behavior Requires Thinking at the Margin