The most anyone is willing to pay for another purse is $30. Currently the price of a purse is $40, and the cost of producing another purse is $50. The marginal benefit of a purse is
A) $40.
B) $50.
C) $30.
D) an amount not given in the answers above.

Question

Quizplus · Accepted Answer

The marginal benefit of a good is the additional benefit that a person receives from consuming one more unit of the good. Since the most anyone is willing to pay for another purse is $30, and the price of a purse is $40, the marginal benefit of a purse is only $30. Therefore, it would not be rational to buy another purse at the given price.

The Most Anyone Is Willing to Pay for Another Purse