Economists believe that people respond in a predictable way to changes in costs and benefits. This is known as:
A) opportunity cost.
B) scarcity.
C) innovation.
D) marginal analysis.
E) other things equal.

Question

Quizplus · Accepted Answer

The concept of people responding to changes in costs and benefits is the basis of marginal analysis, which examines the effects of small, incremental changes on decision-making. Option A refers to the idea that choosing one option means giving up the opportunity to pursue another option, while option B refers to the fundamental economic problem of unlimited wants but limited resources. Option C refers to the introduction of new ideas, products, or processes that improve efficiency or create new markets, and option E refers to the practice of assuming that all other variables remain constant when analyzing the effects of one specific variable.

Economists Believe That People Respond in a Predictable Way to Changes