Comment on the following statement: "I decided to buy a car from a dealer in a town 100 miles away because he was offering a price that was $100 lower than the dealer in my hometown. Therefore, I saved $100."
What will be an ideal response?
Assuming that the individual had no other reason to travel the 100 miles, the savings from the purchase of the car is less than $100 . Travel costs should be taken into account, including the opportunity cost of time.
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If an investor is certain that market interest rates will decline in the future, which of the following will she be most likely to purchase?
A) a six-month government bill B) a two-year government note C) a ten-year government bond D) a fifty-year government bond
Under a flexible exchange rate system, which of the following will be most likely to cause an appreciation in the exchange rate of the dollar relative to the English pound?
a. an economic boom in England, inducing English consumers to buy more American-made automobiles, trucks, and computer products b. higher real interest rates in England c. inflation in the United States while prices are stable in England d. attractive investment opportunities in England, inducing U.S. investors to buy stock in English firms