A freelance graphic designer is considering two projects. Project A offers a payment of $1,000 but requires $200 in software and time costs. Project B, the next best alternative, offers a payment of $700 and has $150 in associated costs. Based on the principle of maximizing net benefit, which of the following statements correctly analyzes the decision?

Evaluating a Business Decision

Consider a scenario where an individual chooses an action because its net benefit is greater than its opportunity cost. True or False: Based on this information alone, it is also necessarily true that the economic rent generated by this action is positive.

Equivalence of Economic Decision Rules

An individual is deciding between taking an unpaid internship and working a paid summer job. The internship is valued at $3,000 in future career benefits and has direct costs of $500. The summer job, which is the next best alternative, would pay $2,000 and has direct costs of $100. The individual chooses the internship. Which of the following statements provides a flawed justification for this decision?

A student is deciding how to spend their afternoon. Their preferred option is to attend a special guest lecture, which they value at $100 in terms of enjoyment and learning. The lecture has a $20 entrance fee. Their next best alternative is to work a part-time job shift, which would earn them $60 and has no direct costs. Match each statement below, which analyzes this scenario, to the specific economic decision-making principle it represents.

Analyzing a Career Choice with Different Decision Frameworks

An entrepreneur is deciding between two ventures. Venture A is expected to generate $50,000 in revenue with $15,000 in direct costs. Venture B, the next best alternative, is expected to generate $40,000 in revenue with $12,000 in direct costs. To maximize their net benefit, the entrepreneur should choose Venture A. The economic rent from choosing Venture A is $____.

An individual is using the concept of economic rent to decide whether to accept a job offer. To do this, they must compare the net benefit of the new job against the net benefit of their next best alternative (their current job). Arrange the following steps into the correct logical sequence required to make a decision that maximizes their net benefit.

Evaluating a Project Choice

Comparing Alternatives in Decision-Making (Concert vs. Babysitting)

Decision Rule: Net Benefit vs. Opportunity Cost

Decision Rule: Positive Economic Rent