Suppose you are visiting the local Big Y supermarket to purchase groceries. At t

Question

Suppose you are visiting the local Big Y supermarket to purchase groceries. At the grocery, you see an advertisement for a store rewards card. The card offers gasoline discounts that are tied to the amount of money that a consumer spends at the store. The advertisement explains that the discounts accrue after a minimum purchase of $50. You decide to sign up for the card, in spite of the fact that you had only planned to buy $47 worth of groceries. Why is this decision rational? Explain, using a fundamental principle of economics, why you would make this decision.

Develop a response that includes examples and evidence to support your ideas, and which clearly communicates the required message to your audience. Organize your response in a clear and logical manner as appropriate for the genre of writing. Use well-structured sentences, audience-appropriate language, and correct conventions of standard American English.

Explanation / Answer

This decisions is rational or not, this depends on the opportunity cost of spending $3 more. If the opportunity cost of spending $3 is not very high, then the decision can be said to be rational.
opportunity cost is the cost associated with an activity. It is the concept of comparing the two goods or activities on the basis of utility associated with each activity.

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