Mitch has $100 to spend and wants to buy either a new amplifier for his guitar or a new mp3 player to listen to music while working out.Both the amplifier and the mp3 player cost $100,so he can only buy one.This illustrates the basic concept that
A) trade can make everyone better off.
B) people face trade-offs
C) rational people think at the margin.
D) people respond to incentives.

Question

Quizplus · Accepted Answer

This scenario illustrates the concept of trade-offs. Mitch must choose one item over the other, as he cannot afford both. He must weigh the benefits and drawbacks of each option and make a decision based on his preferences and priorities. This is an example of making a trade-off between two choices.

Mitch Has $100 to Spend and Wants to Buy Either