The expected marginal benefit to you from purchasing a new sport utility vehicle is $30 000. If the price of the new sport utility vehicle is $32 000, what will you do?
A) If you are acting rationally, you will borrow $2000 and purchase a new sport utility vehicle.
B) You will not purchase the new sport utility vehicle at this time if you are acting rationally.
C) If you are acting rationally, you will purchase sport utility vehicles until the marginal cost of doing so falls to $30 000.
D) If you do not purchase the new sport utility vehicle, your net loss will be $2000.

Question

Quizplus · Accepted Answer

If the expected marginal benefit is $30,000 and the price of the new sport utility vehicle is $32,000, the marginal cost is greater than the marginal benefit. Therefore, acting rationally would be to not purchase the new sport utility vehicle at this time.

The Expected Marginal Benefit to You from Purchasing a New