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?
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 are not spending enough money; removing the penny will force people to spend more.

Question

Quizplus · Accepted Answer

As prices have increased over time, the value of pennies has decreased. This means that it takes a larger quantity of pennies to make a transaction, and carrying around large quantities of pennies has become burdensome. The opportunity cost of carrying around large quantities of pennies (the cost of the time and effort to carry around the extra weight) has become too high, leading to the reduced use of pennies for transactions.

The Government Has Been Considering Doing Away with Minting Pennies