Mr.Freezee operates a fleet of ice cream trucks that drive around neighborhoods selling ice cream.He is trying to decide whether he should buy another ice cream truck to add to his fleet.He determines that one more truck will add $750 to his revenue but that the truck will also increase his costs by $1,000.Based on marginal analysis,Mr.Freezee decides:
A)that he should not purchase the truck since the costs outweigh the benefits.
B)that he should purchase the truck since the benefits outweigh the costs.
C)that he should purchase the truck since his profits will rise by $250.
D)to purchase several trucks with the same costs and benefits.

Question

Quizplus · Accepted Answer

Mr. Freezee should not purchase the truck since the costs, which are $1,000, outweigh the benefits, which are $750. The marginal benefit is less than the marginal cost, so it would lead to a loss.

MrFreezee Operates a Fleet of Ice Cream Trucks That Drive