Exhibit 14-3
-Jira is searching for a big screen television. Exhibit 14-3 shows her marginal cost and marginal benefit from searching for the television. How many minutes should she search?

Question

Exhibit 14-3 
-Jira is searching for a big screen television. Exhibit 14-3 shows her marginal cost and marginal benefit from searching for the television. How many minutes should she search?

Quizplus · Accepted Answer

The optimal choice is where marginal benefit equals marginal cost. At 15 minutes, Jira's marginal cost is equal to her marginal benefit, so she should search for 15 minutes. At 0 minutes, her marginal cost is greater than her marginal benefit, so it is not worth searching. At 5 and 40 minutes, her marginal cost is less than her marginal benefit, so she should have searched longer, but we do not know whether she continued to search beyond those times.

Exhibit 14-3 -Jira Is Searching for a Big Screen Television. Exhibit 14-3