Question

Billie Jean has $120 to spend and wants to buy either a new amplifier for her guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $120, so she can only buy one. This illustrates what basic concept?

Answer 1

Trade offs

Step-by-step explanation:

Trade-off is a sacrifice made to have a particular product.

Economic agents face trade offs because wants and needs are unlimited while resources needed to satisfy them are limited.

In this question, the resources are $120 while the wants are guitar and amplifier.

$120 isn't enough to buy both items. Billie Jean has to choose one of the options. If he chooses the amplifier, he forgoes the opportunity of buying the guitar and if he buys the guitar, he forgoes the opportunity of buying an amplifier. This illustrates a trade off.

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