Question 3
Basic ConceptsA student in Obu'pu Secondary School discovers that he simultaneously needs a biro, an exercise book, an eraser and a ruler, but that he can purchase only one of these items. What is the first thing he is expected to do?
- A.Check how much money he has
- B.Find out which is the cheapest of the items
- C.Draw up a scale of preference
- D.Weigh the opportunity cost of each item against the others.
Show the answer and explanation
Answer: C (Draw up a scale of preference)
Explanation
When wants compete for limited money, the first step is to rank them in order of importance in a scale of preference; he then buys the item at the top.