Question

Because people make decisions at the margin, when deciding whether to purchase a second car, they would therefore compare: the dollar cost of having two cars with the potential income the two cars may generate. None of the answers is correct. the additional benefits expected from a second car with the total cost of the two cars. the additional benefits expected from a second car with the additional costs of the second car.

Answer 1

The correct answer is letter "B": None of the answers is correct.

Step-by-step explanation:

Marginal decisions imply considering two factors: total benefits and total costs. A rational choice would imply going ahead with a decision if the total benefits are greater than the total costs and discarding a decision when the total costs are higher than the total benefits.

Therefore, while deciding to buy a second car, it must be considered if the total benefits of having two cars are greater than the costs of owning two cars.