the table below show us how the marginal benefit of pizza dinner varies for Luig
ID: 1234670 • Letter: T
Question
the table below show us how the marginal benefit of pizza dinner varies for Luigi with the number consumed per month.Dinners per month Marginal benefit per dinner
1 $4.00
2 $3.00
3 $2.00
4 $1.00
Explanation / Answer
Economics Decision Rule: - If the marginal benefit is equal to or exceeds the marginal cost, do it. - If the marginal benefit is less than the marginal cost, don’t do it. A. If the price per dinner is $4.99, how many dinners will Luigi consume a month? B. Suppose the price per dinner falls to $2.99. How many dinners will Luigi consume a month? A.)At the price of $4.99, Luigi will not consume any pizza dinners this month because the cost on the margin outweighs the benefit of consuming a dinner on the margin, i.e. $4.99 > $4.00. B.At the price of $2.99, he will consume 2 dinners because the marginal benefit from the second dinner ($3.00) exceeds the marginal cost of the second dinner ($2.99). Note that at the price of $2.99 a dinner, he will not consume the third dinner since marginal cost of consuming the third dinner is greater than the marginal benefit of consuming the third dinner (i.e. $2.99 > $2.00).
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.