Question

People (and Firms) make decision at the

a. Margins

b. Averages

c. Totals

d. Budgets

Answer 1

People (and Firms) make decision at the

a. Margins

b. Averages

c. Totals

d. Budgets

Solution :

a. Margins

Explanation for the answer :

It means to think about your next step forward. The word “marginal” means “additional.” The first glass of lemonade on a hot day quenches your thirst, but the next glass, maybe not so much. If you think at the margin, you are thinking about what the next or additional action means for you. Many economics courses start with the principle that "rational people think at the margin". What this means is that people make decisions by calculating the additional (marginal) benefits and additional (marginal) costs of a decision. If the marginal benefits exceed the marginal costs, they take the action. Nearly all choices are made at the margin. That means they almost always involve additions to, or subtractions from, current conditions, rather than all or nothing decisions… We don't make all-or-nothing decisions, such as choosing between eating or wearing clothes.