Georgia DECA Advertising Practice Test

Mischa decides against buying a car because he believes the large expense isn't worth it and he would only drive it on the weekends. What has he considered in this decision?

1. Opportunity costs

2. Cost vs. benefit

3. Financial planning

4. Long-term investment

The correct answer is: Cost vs. benefit

Mischa is evaluating the situation by weighing the cost of purchasing a car against the benefits he would receive from owning it. His conclusion stems from the understanding that the expense associated with buying a car might not provide sufficient value, given that he would only be utilizing it on weekends. This type of analysis is central to the concept of cost vs. benefit, where an individual assesses whether the advantages of a decision justify the associated costs. In this case, the potential financial burden of the car, including loan payments, insurance, maintenance, and fuel, is considered against the limited utility he expects from it. Since he determines that the financial outlay does not match the relatively low frequency of use, he decides not to proceed with the purchase. This evaluation illustrates an essential economic principle that helps individuals make rational choices regarding their resources and expenditures.