Refer to the figure below. Suppose MC₁ is the marginal cost of information and MB₁ is the marginal benefit of information. Should a rational consumer pay $6 to get a 5ᵗʰ unit of information?
A)Yes, because at this price, the marginal benefit of the 5ᵗʰ unit exceeds its marginal cost.
B)No, because at this price, the marginal cost of the 5ᵗʰ unit exceeds its marginal benefit.
C)Yes, because at this price, the marginal benefit of the 5ᵗʰ unit equals its marginal cost.
D)No, because at this price the marginal benefit of the 5ᵗʰ unit exceeds its marginal cost.

Question

Refer to the figure below. Suppose MC₁ is the marginal cost of information and MB₁ is the marginal benefit of information. Should a rational consumer pay $6 to get a 5ᵗʰ unit of information? 
A)Yes, because at this price, the marginal benefit of the 5ᵗʰ unit exceeds its marginal cost. 
B)No, because at this price, the marginal cost of the 5ᵗʰ unit exceeds its marginal benefit. 
C)Yes, because at this price, the marginal benefit of the 5ᵗʰ unit equals its marginal cost. 
D)No, because at this price the marginal benefit of the 5ᵗʰ unit exceeds its marginal cost.

Quizplus · Accepted Answer

The marginal benefit of the 5ᵗʰ unit of information is only $4.

Refer to the Figure Below