Final answer:
Lydia showed thinking marginally by valuing the additional happiness her sister would receive from the gift more than the extra dollar spent, reflecting a thoughtful consideration of marginal benefits over marginal costs.
Step-by-step explanation:
In the context of economic decision-making, thinking marginally refers to considering the additional benefits and costs of a decision. Lydia's choice to spend an extra dollar on her sister's gift illustrates marginal thinking by valuing the marginal benefit (the happiness or satisfaction her sister might receive from the gift) over the marginal cost (the extra dollar spent). The decision implies Lydia deemed the additional joy or utility her sister would gain from the gift exceeded the value of keeping the dollar. Such choices often occur in day-to-day life, where individuals weigh incremental costs against incremental benefits to make rational economic decisions.
Lydia's willingness to spend more than she planned can also suggest she values her relationship with her sister highly and believes that the additional investment in the gift will strengthen their bond or express her affection more effectively. Lydia's actions also reflect an understanding of opportunity cost - the cost of forgone alternatives when one option is chosen over another. The act of spending one more dollar on a gift means Lydia has one dollar less to spend on other goods or savings, but the perceived benefit to her sister's happiness was worth the opportunity cost.