Chapter 5.4, Problem 4R

To determine

To Discuss: The importance of trade-off in buying a vehicle.

Explanation of Solution

The most important trade-off involved in buying a vehicle by consumer is its cost, whether they can afford the price of new vehicle or not, some of the trade-offs while buying a vehicle are as follows:

• Engine:

Usually the smaller the engine, therefore the less the gas a vehicle burns. Thus, it makes a car with smaller engine less costly to operate but the smaller engine will affect the car performance and it will increase the maintainence cost.

• Costs:

Newer vehicle cost more but they require fewer repairs than an older one.

• Energy Efficient:

The smaller the vehicle the more energy efficient it will be. Therefore, if accident occurs, then large autos usually provide better protections for passengers.

Economics Concept Introduction

Introduction:

The term trade-off is often expressed/known as opportunity cost, which is the most preferred possible alternative. Trade-off involves a sacrifice that must be made to get certain goods and services. Trade-offs when done systematically and carefully, involves comparing the cost and benefits of each of the available alternatives with each other.

Consumers continuously practice marginalize and make trade-off as they considered whether to buy one more unit or unit less of goods and services in their efforts to obtain a mix of goods and services that afford them the greatest satisfaction for their available buying power.