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Macroeconomics 10th Edition by Roger Arnold
Edition 10ISBN: 978-1111823016Macroeconomics 10th Edition by Roger Arnold
Edition 10ISBN: 978-1111823016 Exercise 1
How would an economist define the efficient amount of time spent playing tennis?
Explanation
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The efficient amount of time spent in playing tennis can be defined as the right amount of time or optimal amount of time spent in playing tennis. The Efficient amount of time spent playing tennis would be the amount for which Marginal Benefit derived from playing tennis (MB) is equal to Marginal Cost of playing tennis (MC). We say that efficiency is achieved where Marginal Cost = Marginal Benefit (MC = MR).
Let us look at the table which shows cost and benefit from playing the tennis:
The above table can be explained with graph with the help of Marginal Benefit Curve and Marginal Cost Curve:
Marginal Benefit Curve: Marginal Benefit curve is downward sloping. Because we assume that as we consume more and more of any good or service, additional benefit derived from it goes on diminishing.
Marginal Cost Curve: Marginal Cost curve is upward sloping. Because we assume that as we consume more and more of any good or service, additional cost derived from it goes on increasing.
In the figure above, the marginal benefit curve and marginal cost curve are intersecting at point A, i.e. at 4 hours of playing. Thus, in this case, 4 hours in the efficient amount of time spent playing tennis.
Let us look at the table which shows cost and benefit from playing the tennis:
The above table can be explained with graph with the help of Marginal Benefit Curve and Marginal Cost Curve:Marginal Benefit Curve: Marginal Benefit curve is downward sloping. Because we assume that as we consume more and more of any good or service, additional benefit derived from it goes on diminishing.
Marginal Cost Curve: Marginal Cost curve is upward sloping. Because we assume that as we consume more and more of any good or service, additional cost derived from it goes on increasing.
In the figure above, the marginal benefit curve and marginal cost curve are intersecting at point A, i.e. at 4 hours of playing. Thus, in this case, 4 hours in the efficient amount of time spent playing tennis.
Macroeconomics 10th Edition by Roger Arnold
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