James is currently earning a 3.9 GPA at a third-tier school.He considers transferring to a more competitive school,where the advisors warn him to expect a drop in his GPA.What does economic theory suggest about this situation?
A)James may prefer to be a "big fish in a little pond" and stay at his current school,rather than transfer to the more competitive one where he is less likely to stand out.
B)James' choice in this example is to choose his frame of reference,which inherently affects the utility we derive from our actions.
C)James' frame of reference will change if he switches schools,so his constant performance may derive different levels of utility.
D)All of these statements are true.

Question

Quizplus · Accepted Answer

Economic theory suggests that individuals make decisions based on the utility they derive from their choices. In this situation, James may prefer to stay at his current school because he can be a "big fish in a little pond," which may provide a higher level of utility for him. However, if he transfers to a more competitive school, his frame of reference will change, and his constant level of performance may derive different levels of utility. Therefore, James' choice in this example is to choose his frame of reference, which inherently affects the utility he derives from his actions. Hence, all of the given statements are true.

James Is Currently Earning a 3