When you compare prices for new tires, how are you using money in this case?

• A. As a tool to determine the elasticity of supply
• B. As a way to maximize producer surplus
• C. As a method to calculate marginal utility
• D. As a measure of the opportunity cost of purchasing tires

Answer: (D)

Verified step by step guidance

1. Understand the role of money in economic decision-making: Money often serves as a common measure to compare the value of different goods and services, helping consumers make choices based on trade-offs.
2. Recognize that when comparing prices for new tires, you are essentially evaluating the cost of purchasing one good relative to other possible uses of that money, which relates to the concept of opportunity cost.
3. Recall that opportunity cost is the value of the next best alternative foregone when making a choice, so the price of tires represents what you give up to obtain them.
4. Identify that the other options (elasticity of supply, producer surplus, marginal utility) relate to different economic concepts: elasticity measures responsiveness of quantity supplied, producer surplus relates to producers' gains, and marginal utility measures additional satisfaction from consumption.
5. Conclude that in this context, money is best understood as a measure of opportunity cost, helping you decide whether buying tires is worth the value of what you must give up.