Vinnie is looking for an apartment in Regina.In Regina,75% of the two-bedroom,one-bath apartments cost $800 a month and 25% cost $600.Vinnie would prefer to find an apartment that rents for $600.The marginal cost of looking at the first apartment is $15,the marginal cost of looking at the second apartment is $30,and so on.
-Refer to the information above.At most,Vinnie will be willing to look at _____ apartments.

Question

Quizplus · Accepted Answer

Vinnie will be willing to look at apartments until the marginal cost of looking exceeds the expected savings. The expected savings from finding a $600 apartment is $200 (the difference between $800 and $600). The marginal costs are $15 for the first, $30 for the second, and $45 for the third. The total cost for looking at three apartments is $90, which is less than the $200 savings. However, looking at a fourth apartment would cost an additional $60, totaling $150, which is still less than $200, but the question asks for the maximum number of apartments he is willing to look at before the cost exceeds the savings. Therefore, the correct answer is 3.

Vinnie Is Looking for an Apartment in Regina