Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
She is comparing marginal benefits to marginal costs to maximize her overall utility.
B
She is ignoring opportunity costs and focusing only on the smartphone's price.
C
She believes that all purchases should be made based on their total costs rather than marginal analysis.
D
She thinks the decision should solely depend on the brand reputation of the smartphone.
Understanding the Answer
Let's break down why this is correct
Answer
Maria is using the principle of marginal analysis to make her decision about the smartphone. This principle involves comparing the additional benefits of a choice to its additional costs. In her case, she sees that the benefit of the new smartphone is $600, which is greater than the cost of $500. Since the benefit exceeds the cost, it suggests that buying the new smartphone is a good choice because she would gain $100 in value. By applying marginal analysis, Maria is focusing on how the decision will improve her situation based on the extra benefits she would receive.
Detailed Explanation
Maria is looking at the extra benefits from the new phone. Other options are incorrect because This answer suggests Maria ignores other costs; This option says Maria should only think about total costs.
Key Concepts
Marginal Analysis
Consumer Surplus
Opportunity Cost
Topic
Marginal Analysis
Difficulty
easy level question
Cognitive Level
understand
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