Jared declines to purchase a new bicycle priced at $200. Therefore:
A)Jared does not enjoy riding a bicycle.
B)the expected marginal benefit of the bicycle to Jared exceeds $200 that could be spent on other things.
C)the expected marginal benefit of the bicycle to Jared is less than $200.
D)None of the above is true.

Question

Jared declines to purchase a new bicycle priced at $200. Therefore:
A)​Jared does not enjoy riding a bicycle.
B)​the expected marginal benefit of the bicycle to Jared exceeds $200 that could be spent on other things.
C)​the expected marginal benefit of the bicycle to Jared is less than $200.
D)​None of the above is true.

Quizplus · Accepted Answer

The fact that Jared declines to purchase the bicycle suggests that the expected marginal benefit of the bicycle to Jared is less than $200. This means that for Jared, the satisfaction he would get from the bicycle is lower or equal to what he could get by spending that $200 on other things. It does not necessarily mean that Jared does not enjoy riding a bicycle, so option A is not necessarily true. Option B is incorrect as it suggests that the opposite of what is happening is true - that the expected marginal benefit exceeds the price. Therefore, option C is the best choice.

Jared Declines to Purchase a New Bicycle Priced at $200