Question

Activities
. Can you think for yourself of
some other examples where a
person with a given income has
to choose which things and in
what quantities he or she can
buy at the prices that are being
charged (called the current
prices)?​

Answer 1

Answer:

Explanation:

Key points

The budget constraint is the boundary of the opportunity set—all possible combinations of consumption that someone can afford given the prices of goods and the individual’s income.

Opportunity cost measures cost in terms of what must be given up in exchange.

Marginal analysis is the process of comparing the benefits and costs of choosing a little more or a little less of a certain good.

The law of diminishing marginal utility indicates that as a person receives more of a good, the additional—or marginal—utility from each additional unit of the good declines.

Sunk costs are costs that occurred in the past and cannot be recovered; they should be disregarded in making current decisions.

Utility is the satisfaction, usefulness, or value one obtains from consuming goods and services.