Question

Chuck offers $240,000 for a house. The seller turns down the offer but says she will sell the house for $260,000. However, Chuck refuses to pay the higher price. If Chuck is following the economic decision rule, the marginal benefit of the house to:

Answer 1

Answer:

Chuck must be less than $260,000

Explanation:

The economic decision rule is: Do it if that marginal benefit exceeds the marginal cost and Since Chuck was unwilling to purchase the house at $260,000, we can deduce that the marginal benefit of purchasing the house must be less than $260,000 due to the fact that the seller turns down the offer but says she will sell the house for $260,000.