Sean is an owner of a professional sports team in a large league. To promote fai

Question

Sean is an owner of a professional sports team in a large league. To promote fairness, the team with the most losses in the league automatically gets the best new player to enter the league next year.

Consider the following sentence: In order to get the best new player next year, Sean orders his team to intentionally lose as many games as possible.

Which basic concept of individual choice does this sentence best illustrate?

1. All costs are opportunity costs.

2. An optimal decision is one that best serves the objectives of the decision maker.

3. Externalities are a shortcoming of the market.

4. Opportunity costs and money costs (price) are related, but not always exactly the same.

Explanation / Answer

The correct option is 2. An optimal decision is one that best serves the objectives of the decision maker. Sean is a rational decision maker. Losing a match will gain his team a best player. More they lose match higher number of best players they get.

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