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You're Deciding Whether to Install an $800 Moonroof and a $400

Question 25

Multiple Choice

You're deciding whether to install an $800 moonroof and a $400 security system in your car. Suppose the marginal benefit from the moonroof is $700 and the marginal benefit from the security system is $600. The economic decision rule dictates that you should:


A) purchase only the moonroof because that will provide you with the greatest marginal benefit.
B) purchase only the security system because its marginal benefit exceeds its marginal cost.
C) purchase both options because the combined cost of both is less than the combined benefit.
D) not purchase either because the benefits of each do not exceed the costs.

Correct Answer:

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