Thinking on the Margin Quiz

What does the word 'marginal' mean in economics?

• Exactly the same

• A lot more or a lot less

• Completely different

• A little bit more or a little bit less

What does thinking on the margin mean?

• Ignoring all costs and benefits

• Comparing the benefit of the next decision to its cost

• Making decisions based on emotions

• Choosing the most expensive option

What is the key to arriving at an optimal decision when thinking on the margin?

• Ignoring all costs and benefits

• Choosing the option with the highest cost

• Comparing the marginal benefits to the marginal costs

• Making decisions based on intuition

What is the sunk cost fallacy?

• Focusing too much on what was paid for an item and not enough on the best choices right now

• Ignoring all past decisions

• Always giving up on past mistakes

• Never making any decisions based on past experiences

What is the advice of an economist regarding past mistakes?

• Ignore what you can't change and focus on the future

• Hold on to past mistakes and try to prove them right

• Never admit to making a bad decision

• Always give up on past mistakes

What should be ignored when making a choice according to thinking on the margin?

• Sunk costs

• Emotional factors

• Future benefits

• Past decisions

What is the key to finding the optimum when thinking on the margin?

• Arriving at a point where the marginal benefits equal the marginal costs

• Choosing the option with the highest cost

• Ignoring all costs and benefits

• Making decisions based on intuition

What is the main focus when making a decision according to thinking on the margin?

• Make decisions based on emotions

• Focus on past decisions

• Ignore all costs and benefits

• Only think about the costs and benefits that change with that choice