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Suppose you have just finished paying off the $4000 loan on your car, and it stops working. Your mechanic tells you that it will cost
Suppose you have just finished paying off the $4000 loan on your car, and it stops working. Your mechanic tells you that it will cost $1000 to repair it. You want to get your wheels back! But your car is quite old and you are hesitant to put another $1000 into it. Instead, you are contemplating purchasing a much newer car for $5000. What should you do? (NOTE: Answer this question by determining the marginal cost and the marginal benefit for each option and then applying the economic decision rule.)
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