The government has been considering doing away with minting pennies because they are rarely used for purchases (with most people collecting them or throwing them away).How would an economist best explain this consumer behavior?
A) More people are using credit and debit cards,so they are not in the habit of using monetary change.
B) Prices have increased over time,and it would take far too many pennies to buy anything of value.
C) Prices have increased over time,and the opportunity cost of carrying around large quantities of pennies has become too large.
D) Prices have increased over time,and the opportunity cost of carrying around pennies has fallen.
E) People who use pennies probably aren't spending enough money; removing the penny will force people to spend more.

Question

Quizplus · Accepted Answer

As prices have increased over time, carrying around large quantities of pennies has become too burdensome in terms of the opportunity cost. It is easier for individuals to use electronic forms of payment or round up/down to the nearest nickel. Therefore, people are more likely to collect or discard pennies rather than use them for transactions.

The Government Has Been Considering Doing Away with Minting Pennies