1. AJ is buying a new car and chooses to pay $250 for upgraded floor mats because he is already spending $24,000; the $250 is only about 1 percent of the purchase price. This describes an example of
a. taking into account the opportunity costs of buying the car and making the best choice.
b. relative value because he is comparing the value of the floor mats relative to the value of the car.
c. the best way AJ can spend his money because he is thinking of everything he could do with his money.
d. the unseen alternatives of his decision, such as saving money or paying for college.
b. relative value because he is comparing the value of the floor mats relative to the value of the car.
2. The reason people cannot have everything they want is because of
a. scarcity.
b. explicit alternatives.
c. shortages.
d. credit.
a. scarcity.
3. Tati made an impulse purchase by buying a $1000 handbag. An impulse purchase means that she most likely did not think of the _________________alternatives for the $1000.
a. best
b. explicit
c. implicit
d. worst
b. explicit.
b. relative value because he is comparing the value of the floor mats relative to the value of the car.
The correct answer is b. relative value because he is comparing the value of the floor mats relative to the value of the car.
To arrive at this answer, we can analyze the given information. AJ is buying a new car and chooses to pay $250 for upgraded floor mats. The important detail is that this cost of $250 is only about 1 percent of the purchase price of $24,000.
By comparing the cost of the floor mats to the overall purchase price of the car, AJ is considering the relative value of the mats in relation to the car. This means that AJ is valuing the floor mats based on their worth in comparison to the car itself, rather than just looking at the price in isolation.
Therefore, the correct choice is b. relative value because he is comparing the value of the floor mats relative to the value of the car.