Marginal thinking is best demonstrated by: A. choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time. B. deciding to never purchase a coat made with animal skins or furs C. acquiring the information relevant to a choice before making that choice D. measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake
The correct answer and explanation is:
Correct Answer: A. choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time.
Explanation (300 words):
Marginal thinking refers to evaluating the additional benefits and additional costs of a decision, rather than the total costs and benefits. It’s a fundamental concept in economics that helps individuals and businesses make optimal choices with limited resources.
In Option A, the individual is deciding whether to study for one more hour, considering whether the extra improvement in their quiz score is worth the time sacrificed. This is a classic example of marginal analysis — weighing the marginal benefit (higher quiz score) against the marginal cost (lost time that could be spent elsewhere). If the benefit outweighs the cost, the decision to study longer is justified.
Let’s evaluate the other options:
- Option B: Deciding never to purchase a coat made with animal skins is a decision based on personal ethics or values, not marginal thinking. It’s an absolute decision, not one based on incremental analysis.
- Option C: Acquiring relevant information before making a decision is a good practice, but it reflects informed decision-making, not marginal thinking. It doesn’t involve evaluating additional units of cost or benefit.
- Option D: Measuring all costs and all benefits when deciding on a second milkshake is a total analysis, not a marginal one. Marginal thinking would involve evaluating just the additional cost and benefit of the second milkshake, not the entire meal.
In economics, optimal decision-making often happens “at the margin.” It’s about small, incremental changes — doing a little more or a little less — rather than sweeping all-or-nothing decisions. Hence, Option A best captures this principle.