This graph illustrates the marginal costs and marginal benefits of acquiring information before making a major purchase. If the original curves are MB₀ and MC₀, the optimal quantity of information about this product is:
A)I₁.
B)I₂.
C)I₃.
D)I₄.

Question

This graph illustrates the marginal costs and marginal benefits of acquiring information before making a major purchase.  If the original curves are MB₀ and MC₀, the optimal quantity of information about this product is:
A)I₁. 
B)I₂. 
C)I₃. 
D)I₄.

Quizplus · Accepted Answer

Consumers should acquire information up to the point where the marginal benefit of additional information equals the marginal cost of additional information.

This Graph Illustrates the Marginal Costs and Marginal Benefits of Acquiring