Question

Which of the following is the best example of a marginal change? Select one: a. After graduating college, Audrey's income increases from $500 per month to $3,000 per month. b. Morgan gets a raise at her part-time job and is now paid $7.25 per hour instead of $7.00. c. Housing prices in an area increase by 40 percent when a new interstate is built that passes nearby. d. A hard freeze wipes out half of the orange crop in Florida and the price of orange juice doubles.

Answer 1

Answer: Option (b) is correct.

Explanation:

Marginal change refers to the small addition or deduction to the overall quantity of that variable. For example, in our case, there is an incremental increase in the wage rate of Morgan by $0.25.

All the other options in the question are not considered as any incremental change but the change occur due to the exogenous factors.